The Inland Revenue Board of Malaysia (IRBM) released Public Ruling No. 2/2024 on 28 May, 2024. This revised and replaced Public Ruling No. 10/2015 of 16 December 2015 regarding the taxation of investment holding organisations.

This update introduces two changes: paragraph 9.4 and paragraph 9.6.

Paragraph 9.4

Paragraph 9.4 is related to expenses and deductions related to single-tier dividends. According to the new section, with effect from the year of assessment (YA) 2017, under paragraph 12B, Schedule 6 of the ITA, dividend income that is not entitled to a tax deduction at source is exempted from income tax, while any deductions related to the dividend income are disregarded in determining chargeable income.

This means that, other than the expenses related to dividends, any allowances under Schedule 3 of the ITA and other deductions, including zakat, donations, and others which are related to dividend income, shall be disregarded in calculating statutory/chargeable income.

The paragraph 9.4 also includes a new example 13 to provide further clarification.

Paragraph 9.6

Paragraph 9.6 is related to the time limit for carrying forward rules for unabsorbed adjusted business losses.

Paragraph 9.6.1: With effect from YA 2019, any unabsorbed current year adjusted business losses in a relevant YA can only be carried forward for up to ten (10) consecutive YAs.

Paragraph 9.6.2: The period of ten (10) consecutive YAs commences immediately after the YA in which the adjusted business loss arises. Any balance of unabsorbed adjusted business losses after the end of the period of ten (10)  consecutive YAs is to be disregarded.

Paragraph 9.6.3: The time limit for carrying forward unabsorbed adjusted business losses arising from a business of a person is explained in detail in Public Ruling No. 1/2022.

The paragraph 9.6 also includes a new example 14 to provide further clarification.