Tax Deduction for Secretarial and Tax Filing Fees

Effective from Year of Assessment (YA) 2022

Tax Consideration

• Treatment of Fees Incurred Before YA 2020: Fees incurred before YA 2020 that have not been paid and for which tax deductions have not been claimed are no longer deductible from YA 2022 onwards.
• Treatment of Fees Incurred During YA 2020 and YA 2021: Fees incurred during YA 2020 and YA 2021 that have not been paid and for which tax deductions have not been claimed are deductible from YA 2022 onwards, provided the fees are paid.

You can download the amended guideline as per following link:

https://www.dropbox.com/scl/fi/q46zqsv9pugk8j65bbccf/148.2-HASiL-Amended-Guidelines-on-Deduction-of-Secretarial-Fees-and-Tax-Filing-Fees-from.pdf?rlkey=b1hbons0tjp9273e7busfh2qq&dl=0

Tax Deduction Rules from YA 2020 (Previous P.U)

According to the Income Tax (Deduction For Expenses in Relation to Secretarial Fee and Tax Filing Fee) Rules 2020 [P.U.(A) 162/2020], published on May 19, 2020, the following expenses are eligible for tax deductions effective from YA 2020:

Deductible Limits

1. Before YA 2020:
   • Maximum deductible amount for secretarial fees: RM 5,000
   • Maximum deductible amount for tax agent fees: RM 10,000
2. Starting from YA 2020:
   • Combined maximum deductible amount for secretarial and tax agent fees: RM 15,000

Requirements for Deductible Fees

1. Secretarial Fees:
   • Must be charged for services provided by a company secretary registered under the Companies Act 2016 (Act 777).
   • Must be incurred and paid within the basis period for the year of assessment.
2. Deductible Secretarial Services:
   • Monthly/Yearly secretarial fees.
   • Preparation for Annual General Meetings (AGM).
   • Preparation of resolutions.
   • Share allotment/transfer fees.
   • Note: Services must be provided by a registered company secretary under the Companies Act 2016.
3. Tax Filing Fees:
   • Must be charged for the preparation and submission of returns in the prescribed forms, including:
     1. Tax Filing Fee (charged by an approved tax agent under the Income Tax Act) – for sections 77, 77A, 77B, 83, and Section 107C.
     2. SST Filing Fee – for the Sales Tax Act 2018 (Act 806) and Services Tax Act 2018 (Act 807).
     3. Departure Levy Return Filing Fee – for Section 19 of the Departure Levy Act 2019 (Act 813).
     4. Tourism Tax Return Filing Fee – for Section 19 of the Tourism Tax Act 2017 (Act 791).
4. Deductible Tax Agent Services:
   • Tax computation and submission fee (Form C).
   • Tax prepayment submission fees (CP204, CP204A, CP204B).
   • SST submission fee.
   • Departure levy form submission fee.
   • Tourism tax submission fee.
   • Note: Services must be provided by a licensed tax agent.

Additional Notes

• Any reimbursements for secretarial and tax agent fees are not deductible.
• All secretarial and tax agent fees must be paid and incurred for the past or existing year-end.
• The total deduction allowed is up to a maximum of RM 15,000 per year of assessment.
• These rules have been effective from YA 2020.

Conclusion

Understanding the tax deduction rules for secretarial and tax filing fees is crucial for optimizing your tax strategy. For YA 2022 and beyond, ensure that you only claim deductions for eligible fees incurred during the specified assessment years. Staying compliant with these regulations can result in significant tax savings, making it essential to keep accurate records and consult with licensed professionals for these services.