Guidelines on the tax deduction for donation or sponsorship of Smart AI-Driven RVMs

Guidelines on the tax deduction for donation or sponsorship of Smart Artificial Intelligence (AI)-Driven Reverse Vending Machines (RVMs)

In Budget 2023, it was proposed that a tax deduction be given to taxpayers with a business source who donate or sponsor Smart AI-Driven RVMs (see Take 5: Malaysia Budget 2023).

The Ministry of Finance (MoF) has recently published on its website the guidelines on the above-mentioned proposal. The Guidelines are in Bahasa Malaysia and are titled “Garis Panduan Permohonan Potongan Cukai Di Bawah Seksyen 34(6)(h) Akta Cukai Pendapatan 1967 Ke Atas Sumbangan/Penajaan Smart Artificial Intelligence (AI)-Driven Reverse Vending Machine (RVM) Bagi Maksud Pengiraan Cukai Pendapatan”.

Some of the salient points are as outlined below.

• Qualifying contributions

Cash or financing of smart vending machines which adopt smart AI technology

• Qualifying taxpayers with business income
  • Companies
  • Individuals
  • Partnerships
  • Trust bodies
  • Cooperative societies
• Supporting documents

(i)             Official receipt

(ii)            Letter of acceptance, or

(iii)          Financing agreement (outlining the duration, location and machine’s serial number)

and

verification by the Ministry of Natural Resources, Environment and Climate Change (NRECC) of the cash, equipment, or services’ value.

The format of the letter of acceptance and verification by NRECC is as outlined in Appendix I and II to the Guidelines.

• Taxpayers are required to apply for and obtain approval from the MoF to qualify for the tax deduction. The details to be submitted are as outlined in Appendix III to the Guidelines.
• The tax deduction is applicable for applications received by MoF between 1 April 2023 and 31 December 2024, where the contributions or sponsorships are made during the same period.