The first part of the article has explained about the conditions,eligibility and
definitions like qualifying services and related companies.
This article now focus on the following tax and non tax incentives of OHQ:
TAX INCENTIVES:
1 | Effective Year of Assessment 2003,income tax exemption on statutory income from ALL income from the provision of qualying services and a part of the income from the provision of services in Malaysia ( not exceeding 20%) for 10 years commencing from a year of assessment in which the date of approval of such OHQ falls in the basis period of that year of assessment Prior to this,10% rate is used for interest income and income from providing qualifying services,royalties ( dividend received fro related companies overseas are always exempted) |
| 2 | Losses (current year as well as unabsorbed losses) in respect of the provision of qualifying services shall be disregarded from the source consisting of the provision of services in Malaysia and other business. |
| 3 | Dividends paid out from the exempt income are tax exempt in the hands of the shareholders |
| 4 | Expatriates working in an OHQ are taxed only on that portion of their chargeable income attributable to the number of days that they are in the country. |
NON TAX INCENTIVES
1 | 100% foreign equity allowed |
| 2 | Borrow freely in foreign currency to fund treasury and fund management services |
| 3 | Number of expatriate posts allowed will be based on skills and requirements |
| 4 | Borrow freely in Malaysian Ringgit up to Rm50million for local use |
| 5 | Open foreign/multi foreign currency accounts with onshore licensed bank in Malaysia to retain export proceeds in foreign currency up to an aggregate overnight balance of USD100million |
| 6 | Open foreign currency accounts with onshore licensed banks,licensed offshore banks in Labuan or overseas banks for crediting foreign currency receivables,other than export proceeds,with no limit on the overnight balances |
| 7 | Obtain any amount of foreign currency credit facilities from onshore licensed banks and licensed merchant banks in Malaysia and from any non-residents for their own use |
| 8 | Invest freely in foreign securities and lend to related companies outside Malaysia with limitations of Malaysian ringgit Rm50million domestic borrowing and the remittances are made in foreign currency equivalent |
| 9 | Use the professional services of a foreign firm provided that such services are not available locally |
| 10 | Allowed to acquire fixed assets as long as it is used for the purpose of carrying out the operations of the OHQ |
The table on tax and non-fiscal incentives given reflects that Malaysia does
not fare below Asia Pacific countries like Singapore in term of reinstating itself
as OHQ centre.
(Refer article on Diagonal taking advantage of this OHQ status)
- Setting Up An Operational Headquarters (OHQ) In Malaysia (Part 1)
- Malaysia Moving Forward – Foreign Exchange Administration /Liberalization of Foreign Exchange Regulation
- Statistics On Operational Headquarters In Malaysia – Oil &Gas
- Statistics On Operational Headquarters In Malaysia
- Operational Headquarter:Diagonal’s Shift from Singapore To KL
- Malaysia Moving Forward – Abolishment of Real Property Gains Tax &Special Incentive Area –Iskandar Development Region
- Statistics On Approved Operational Headquarters In Malaysia For Year 2006
FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four,Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.Also author to another very popular free educational accounting cum finance blog:http://basiccollegeaccounting.com under the branding of College Accounting Coach.
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