Rules for Tax Deduction for Listing Expenses of Technology-Based Companies Gazetted
15 August 2023
- which is involved in the design, development and manufacture, production or application in any of the fields and activities:
- specified in the Schedule to the Rules; and
- which have been certified by Bursa Malaysia Securities Berhad (‘the Exchange”) as the principal business activity of the technology-based company; and
- which has applied for listing on the Main Market of the Exchange (“Main Market”), the Access, Certainty, Efficiency Market of the Exchange (“ACE Market”) or the Leading Entrepreneur Accelerator Platform Market of the Exchange (“LEAP Market”) (each a “Bursa Market”).
The Schedule to the Rules can be accessed
here.
The Deduction
For the purpose of ascertaining the adjusted income from its business for the basis period in a year of assessment, a technology-based company shall be allowed a deduction of an amount equal to the following expenditures incurred by the technology-based company in relation to its listing on a Bursa Market:
- fees paid to the Exchange and Securities Commission Malaysia as the authorities;
- advisory fees paid to:
- the principal adviser for listing on the Main Market;
- the sponsor, being the main adviser for listing on the ACE Market;
- the approved adviser, being the main adviser for listing on the LEAP Market; and
- the solicitor, company secretary, tax adviser, reporting accountant, auditor, valuer, independent market researcher, issuing house and share registrar in relation to the listing exercise; and
- fees paid for underwriting, placement and brokerage services.
Conditions and limits
The deduction of listing expenses under the Rules is subject to the following:
- the deduction shall only be claimed for the basis period in the year of assessment in which the technology-based company is listed on a Bursa Market;
- the total amount of the deduction allowed shall not exceed RM1.5 million;
- the amount of deduction in respect of expenditure shall not exceed the adjusted income of the technology-based company for the basis period in that year of assessment and such adjusted income shall be ascertained before the deduction is made; and
- any amount of expenditure that cannot be claimed or cannot be claimed in full in the basis period in the year of assessment by reason of absence or insufficiency of adjusted income shall not be claimed or allowed in any subsequent years of assessment.
Comments
The tax deduction under the Rules should encourage technology-based companies that meet the criteria for listing on a Bursa Market to seek a listing before the end of year of assessment 2025. The addition of new listings on the Exchange may add more width to the local bourse and help reverse the trend in recent years which has witnessed a significant outflow of foreign funds from the Malaysian stock market.
Alert by Sheba Gumis (Partner) and Joey Tiw (Senior Associate) of the Corporate Practice of Skrine.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.