Updated Guidelines on tax deduction under Section 34(6)(h) of the ITA

Updated Special Guidelines on tax deduction under Section 34(6)(h) of the ITA for contributions to a charity or community project

The MoF has published on its website the updated Special Guidelines on tax deductions allowed for contributions to approved COVID-19-related community and charitable projects, dated 1 April 2022. The Special Guidelines are in Bahasa Malaysia and are titled “Garis Panduan Khas Permohonan Potongan Cukai Pendapatan Bagi Projek Komuniti / Amal Untuk Menangani Wabak COVID-19” (Special Guidelines). The updated Special Guidelines apply to contributions made between 1 April 2022 and 31 December 2022.

Similar to the earlier Special Guidelines, the updated Special Guidelines explain the criteria and procedures to apply for a tax deduction under Section 34(6)(h) of the ITA for the contributions. Some of the key updates are as follows:

• Qualifying contributions are now restricted to the following:

-        Equipment (e.g., ventilators, patient beds, air conditioners, air purifiers or filtration equipment)

-        Consumables (e.g., masks, hand sanitizers, gloves, test kits and personal protection equipment (PPE))

Previously, qualifying contributions also included the following:

-        Cash

-        Fresh or ready-to-eat food (e.g., rice, oil, sauces, sugar, canned food etc.)

-        Services (e.g., cost of disinfection and sanitization (of roads, buildings, markets, places of worship etc.), portable toilets and delivery of supplies)

-        Sponsorships (e.g., rental or provision of temporary infrastructure such as tents or marquee tents)

-        Provision of COVID-19 vaccination facilities (e.g., halls) and services, equipment or supplies for vaccination centres (PPVs)

• Qualifying recipients are now restricted to the following:

-        Government departments or agencies

-        Government hospitals

-        Government schools

Previously, qualifying recipients also included the following:

-        Non-governmental agencies or registered bodies / associations that are not profit or politically motivated

-        Private hospitals

-        Universities and educational institutions

-        PPVs managed by the COVID-19 Immunisation Task Force (CITF) and private sectors with CITF approvals

The appendices to the Special Guidelines have been updated to reflect the above-mentioned changes accordingly.

• The deductions will apply to contributions made until 31 December 2022 or the date the pandemic is declared by the World Health Organization (WHO) to have ended, whichever is earlier.