On 31 January 2022, Inland Revenue Board of Malaysia (IRBM) published the Income Tax (Restriction on Deductibility of Interest) (Amendment) Rules 2022, amending the original rules published in 2019. The rules amend the definition of “qualifying deduction”, that goes into the formula used to determine tax EBITDA.
Accordingly, “qualifying deduction” means-
- where there is business expenditure incurred in the profit and loss account is allowed as deduction under the Act and the amount of the deduction allowed exceeds the amount of the business expenditure incurred, an amount equal to the difference between the amount of the deduction allowed and the amount of the business expenditure incurred in the profit and loss account; or
- where there is no business expenditure incurred in the profit and loss account, the amount of deduction allowable under the Act.”.
The rules also amended the provision of carry forward of interest expense provided that where a person has interest expense which is in excess of the maximum amount of interest, the excess amount can be carried forward and deducted in subsequent years of assessment.
The Rules came into operation on 1 February 2022.
