INCOME TAX ACT 1967 (ACT 53) PART II - IMPOSITION AND GENERAL CHARACTERISTICS OF THE TAX
Section 12. Derivation of business income in certain cases.
(1) Where for the purposes of this Act it is necessary to ascertain any gross income of a person derived from Malaysia from a business of his, then-
(a) subject to subsection (2), so much of the gross income from the business as is not attributable to operations of the business carried on outside Malaysia shall be deemed to be derived from Malaysia;
(b) notwithstanding paragraph (a), if the business consists wholly or partly of the manufacturing, growing, mining, producing or harvesting in Malaysia of any article, product, produce or other thing -
(i) the gross income from any sale of the article, product, produce or other thing taking place outside Malaysia in the course of carrying on the business; or
(ii) where the article, product, produce or other thing is exported in the course of carrying on the business and subparagraph (i) does not apply, an amount equal to the market value of the article, produce, product or other thing at the time of its export,
shall be deemed to be gross income of that person derived from Malaysia from the business.
(2) Where in the case of a business to which paragraph (1) (a) applies-
(a) the business or a part thereof is carried on in Malaysia;
(b) any of the gross income of the business (from wherever derived) consists of a dividend or interest to which subsection 24 (4) or (5) applies; and
(c) the dividend or interest relates either-
(i) to a share, debenture, mortgage or other source which forms or has formed part of the stock in trade of the business or, where only part of the business is carried on in Malaysia, of that part of the business; or
(ii) to a loan of the kind mentioned in section 24(5) granted in the course of carrying on business or that part of the business, as the case may be,
so much of that gross income as consists of that dividend or interest shall be deemed to be derived from malaysia.
