INCOME TAX ACT 1967 (ACT 53)
PART VII - COLLECTION AND RECOVERY OF TAX




Section 108. Deduction of tax from dividends.



(1) Where a dividend is paid or credited by a company to any of its shareholders in the basis period for a year of assessment, then, if the dividend is deemed by virtue of section 14 to be derived from Malaysia, the company shall be entitled to deduct tax therefrom at the rate applicable to the company on the chargeable income for that year of assessment or, where there is no chargeable income of the company for that year at the rate which would be so applicable if there were such chargeable income.

(2) Where a company pays, credits or distributes without deduction of tax a dividend from which it is entitled to deduct tax (or a dividend from which it would have been entitled to deduct tax if the dividend had been wholly paid in cash) , the dividend shall be deemed to be a dividend of such a gross amount as determined in accordance with the formula-
1 X B
--–----
(1– A)

where

A is the rate of tax applicable to the company for a year of assessment at the time of the payment, crediting or distribution of the dividend; and

B is the amount in fact paid or credited or where the dividend consists of property other than money, the amount of the market value of that property at the time of the distribution of the dividend,

and a sum equal to the difference between that gross amount and the amount in B in the above formula shall be deemed to have been deducted from the dividend as tax.

(3) Notwithstanding any other provision of this Act, where a dividend is paid, credited or distributed with or without deduction of tax in the basis period for a year of assessment, and there is a revision in the rate of tax for companies for that year of assessment (in this subsection referred to as the revised rate) , the amount of the dividend received by the shareholder shall be deemed to be a dividend of such a gross amount as determined in accordance with the formula-
1 X B
--–- ----
(1– A)

where

A is the revised rate of tax applicable to the company for that year of assessment at the time of the payment, crediting or distribution of the dividend; and

B is the amount in fact paid or credited or where the dividend consists of property other than money, the amount of the market value of that property at the time of the distribution of the dividend,

and a sum equal to the difference between that gross amount and the amount in B in the above formula shall be deemed to have been deducted from the dividend as tax.

(4) Every company shall upon paying, crediting or distributing to a shareholder a dividend of the kind to which subsection (1) or (2) applies (whether tax is deducted therefrom or not) furnish the shareholder with a certificate setting forth in respect of the dividend-



(5) Within six months following the close of the accounting period, every resident company shall render to the Director General a statement in the prescribed form showing for a year of assessment-



[Am.Act A1151:s.21]
(6) Where, in relation to a year of assessment and a company, the compared total exceeds the compared aggregate at the end of the basis period for a year of assessment, a sum equal to the amount of the excess shall be a debt due from the company to the Government and that debt shall be due and payable on the due date.

(7) Where any excess due and payable by a company under subsection (6) has not been paid by the due date, so much of the excess as is unpaid upon the expiration of that day shall, without any further notice being served, be increased by an amount equal to ten per cent of the excess so unpaid, and the amount unpaid and the increase on the amount unpaid shall be a debt due from the company to the Government and that debt shall be payable forthwith to the Director General.

(8) Where in relation to a company, the compared aggregate exceeds the compared total at the end of the basis period for a year of assessment, a sum equal to the amount of the excess shall be carried forward as a balance for the credit of the company to the following year of assessment.

(9) Where in relation to a year of assessment, a company fails-

and the Director General is of the opinion that the company has paid, credited or distributed dividends to its shareholders in the basis period for that year of assessment, he may compute the amount of the excess referred to in subsection (6) , if any, and shall serve on the company a written requisition in the prescribed form calling upon the company to pay an amount equal to that excess and an amount of an increase not exceeding the amount equal to that excess, and the amount equal to that excess and the increase on that amount shall be a debt due from the company to the Government and that debt shall be payable forthwith to the Director General upon the service of the requisition.

(10) Where a company-


an amount equal to what would have been the total amount of tax deducted or deemed to have been deducted, if subsection (1) or (2) has been applicable, from the gross amount of the dividend (ascertained in accordance with subsection (2) ) paid, credited or distributed to all its shareholders at the time that the dividend was paid, credited or distributed to those shareholders shall be an amount due from the company to the Government and that amount shall be increased by an amount not exceeding the amount due; and the Director General shall serve on the company a written requisition in the prescribed form calling upon the company to pay the amount due and the increase on the amount due, and that amount shall be a debt due from the company to the Government and shall be payable forthwith to the Director General upon the service of the requisition:

Provided that, where the company satisfies the Director General that such certificates have been issued only to particular shareholders specified by the company, that debt shall be reduced to an amount ascertained by reference to the certificates issued to those particular shareholders.

(11) Where in relation to a year of assessment there has been a payment of tax under section 103A an instalment payment under section 107C or a refund of tax , the Director General may make-
[Am.Act A1151:s.21]
(12) The provisions of section 23(b) as to the day on which a dividend is to be treated as paid or distributed shall apply for the interpretation of this section and where this section has applied to a dividend which has been credited it shall not apply to that dividend when paid.

(13) Any debt due under this section shall be recoverable as if it were tax due and payable under this Act.


(14) In this section-

"due date" has the same meaning as in section 103A(12) ;

"tax paid" means any payment of tax made by the company in the basis period for a year of assessment, whether or not paid through instalments under section 107C, less payments (if any) in respect of-

(14A) In this section,a reference to "tax refunded " or "a refund of tax "is a reference to —
Provided that the amount of tax payable (excluding any penalty imposed under section 112 or 113) under that assessment has been paid.
[Ins. Act A1151:s.20]
(15) This section shall not apply to-

[Subs. Act A1093: s.15]


Notwithstanding the provisions of subsection 108(4) of the principal Act before the coming into operation of the amendment to section 108 in section 15 of this Act, in relation to the year of assessment 2000 on current year basis, the statement referred to in that subsection shall be rendered by the company to the Director General within three months after the end of that year of assessment.
[Ins. Act A1093: s.16]
______________________________________________________
[Shall have effect for the year of assessement 2004 and subsequent years of assessment.]

(11) Where in relation to a year of assessment there has been a payment of tax under section 103 or an instalment payment under section 107C or a refund of tax , the Director General may make-

[Am. Act A1151:s.21]
(14) In this section-

"due date" has the same meaning as in section 103(12)(a) ;


"tax paid" means any payment of tax made by the company in the basis period for a year of assessment, whether or not paid through instalments under section 107C, less payments (if any) in respect of-

(a) -
[Am.Act A1151:s.21]


Related reading:
[Act A1093: s.15; Act A1093: s.16]


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