Income tax exemption for organizing conferences in Malaysia

Income tax exemption for organizing conferences in Malaysia

Currently, pursuant to the Income Tax (Exemption) (No. 53) Order 2000 [P.U.(A) 500], a resident company, association or organization whose main activities are promoting and organizing conferences is exempted from tax on statutory income derived from organizing conferences. This exemption, which took effect from YA 1997, is granted on condition that the conference operator brings in at least 500 foreign participants in the YA.

In Budget 2020, it was proposed that the above income tax exemption be expanded to any entity whose main activities are other than promoting and organizing conferences (see Special Tax Alert: Highlights of Budget 2020).

To legislate this, the Income Tax (Exemption) (No. 4) Order 2021 [P.U.(A) 195] was gazetted on 26 April 2021. The Order provides that a qualifying person (i.e. company incorporated under the Companies Act 2016, or an association or organization registered under the Societies Act 1966, which carries on a business or activity other than the business or activity of promoting and organizing conferences) that is a Malaysian-resident is exempted from the payment of income tax in respect of statutory income derived from organizing conferences held in Malaysia. The income tax exemption will apply only if the qualifying person brings in at least 500 foreign participants in the YA.

The following terms have been defined in the Order:

(a)  Statutory income

Means fees and other payments derived by a qualifying person from promoting and organizing conferences held in Malaysia, including the arrangement of accommodation, tours and sightseeing for foreign participants, less any allowable expenses and capital allowances

(b)  Foreign participants

Individuals who are non-Malaysian citizens participating in conferences held in Malaysia, excluding individuals who are non-Malaysian citizens residing in Malaysia

The Order stipulates that the exemption granted does not absolve the qualifying person from any requirement to submit any return, statement of accounts or any other information as required under the ITA. The qualifying person is also required to maintain a separate account for the income exempted under the Order.

This exemption shall not apply to a person who has been granted an exemption under Income Tax (Exemption) (No. 53) Order 2000, which remains in force.

The Order is effective from YA 2020 to YA 2025.