My company share capital is RM2.5 million, is my company entitle for preferential tax rate of 17% wef YA2020?

The Inland Revenue Board has issued a Practice Note 3/2020 – Determination of gross income from business sources of not more than RM50 million of a company or limited liability partnership.

• In addition to share capital requirement, the taxpayer must have gross income from business source not exceeding RM50 million for the basis period for the year of assessment
• Company / LLP which do not have business income but only have passive income is not eligible for preferential tax rate
• Unlisted investment holding company under Section 60F is not eligible for preferential tax rate

Definition of gross income from business income including:

• Manufacturing / trading / services:
• Insurance, indemnity, recoupment, recovery, reimbursement etc in relation to amounts that are tax deductible
• Compensation for loss of income
• Debt arising from stock in trade sold, or services rendered or to be rendered, and use of or employment of any property
• Bad debt recovered where deduction had been claimed previously

• Bank, insurers, developers and contractors
• Gross income is also subject to specific provisions or regulations made under the Act

• Foreign sourced business income is included

• Business income exempted under tax incentive such as pioneer status or investment tax allowance is included