MALAYSIA Trends and Developments Contributed by: Dilys Tan, Adnan Sundra & Low
Such Shariah adviser must be registered with the SC, and is expected to issue a pronounce - ment confirming that the assets to be securitised and the structure of the ABS are compliant with Shariah principles. Taxes Under the ABS Guidelines and, subsequently, the LOLA Guidelines, the special purpose vehi - cle (SPV) incorporated for the purpose of the securitisation transaction must be resident in Malaysia for tax purposes. As such, Malay - sia’s Budget 2001 proposed the abolishment of the imposition of stamp duty and real property gains tax relating to issuances of ABS, in order to strengthen the bond market in Malaysia. Fol - lowing this, the Stamp Duty (Exemption) (No 12) Order 2001 and the Real Property Gains Tax (Exemption) Order 2001 were gazetted. Pursuant to the Stamp Duty (Exemption) (No 12) Order 2001, all instruments that operate to convey, transfer, assign, vest, effect or complete a disposition of any legal or equitable rights or interests in, or title to, any asset to or in favour of an SPV incorporated for the purpose of a secu - ritisation transaction – and any other instrument or document to which such SPV is a party – are exempted from stamp duty. The chargeable gains accruing on the disposal of any chargeable assets to or in favour of an SPV, or in connection with the repurchase of chargeable assets to or in favour of the originator for the purpose of the securitisation transaction, are exempted from the payment of real property gains tax pursu - ant to the Real Property Gains Tax (Exemption) Order 2001. Subsequently, in Malaysia’s Budget 2004 and with the intention of continuous stimulation of the capital market and diversification of the sources of financing for further economic devel -
opment, the Malaysian government announced its intention to ensure neutrality in the tax treat - ment between ABS and other capital market products approved by the SC. Following this, in addition to the stamp duty and real property gains tax exemptions granted for securitisation transactions, the Income Tax (Asset-Backed Securitisation) Regulations 2014 (the “ABS Regulations”) were gazetted on 24 June 2014. The ABS Regulations were intended to apply to originators and the SPV incorporated for the purpose of a securitisation transaction approved/authorised by the SC on or after 1 January 2013, whereby the income of the SPV from all sources is treated as gross income of the SPV from a single source consisting of a busi - ness in the basis period for a year of assess - ment – any expenses incurred by the SPV for the acquisition of trade receivables or stock in trade pursuant to a securitisation transaction that is deductible under the Income Tax Act 1967 (ITA) are deemed to have been incurred throughout the period of the securitisation transaction, and is allowed in ascertaining the adjusted income of the SPV in the basis period for a year of assess - ment that relates to the period of the securitisa - tion transaction. Additionally, where the origina - tor has a call option to buy back stock in trade, any expenses incurred by the SPV for the acqui - sition of stock in trade that is deductible under the ITA are allowed as a deduction in computing adjusted income of the SPV in the basis period for that year of assessment in which the call option expires. Regarding the originator in securitisation trans - actions, the ABS Regulations also provide that the proceeds, gains or losses from the disposal by the originator of trade receivables or stock in trade pursuant to the securitisation transac - tion are deemed to accrue evenly throughout the
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