Tax updates: Group Relief Provisions

A company may surrender up to 70% of its current year adjusted losses to a related company, to be set off against the claimant company’s income, where both companies have a twelve (12) month basis period ending on the same date. 

​Prior to the Year of Assessment 2019, there is no limit to the number of years that a company can surrender its losses, as long as applicable conditions are met. 

Group relief will not apply to a surrendering or claimant company for a basis period for a year of assessment, where the company is enjoying the Investment Tax Allowance or Pioneer Status incentives.

​However, the company will still be eligible to participate in group relief if the Investment Tax Allowance or Pioneer Status incentive periods have expired.

​With effective from the Year of Assessment 2019 following amendments to Section 44(A) of the Income Tax Act 1967, there are significant tightening of the group relief provisions, as follows: 

• A company can only surrender its losses after it has been in operation for more than twelve (12) months.

• The surrendering period is limited to three (3) consecutive years of assessment, and the three period commences from the year immediately following the year of commencement of operations.​

• The claimant company will not be eligible to claim the group relief if it has brought-forward investment tax allowance or unabsorbed pioneer losses under the Promotion of Investments Act 1986, even if the incentive period has already expired.

​If you need further clarification, please do not hesitate to contact our tax team.
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Source: www.mia.org.my/v2/downloads/circulars/2019/40/Dialogue%2030.11.2018%20with%20answers.pdf
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