Note: The full
text of the Guidelines is available here in English : http://www.hasil.gov.my/pdf/pdfam/Guidelines_Section446.pdf
The summary below is only applicable to ordinary
societies registered with ROS. For different types and categories of charitable
organisations, refer to the actual guideline for the relevant provisions.
2.Organisations
that are eligible to apply for tax-exempt status
3.1, 3.2
Objective,
Meaning of charitable purposes:
The organisation is formed purely for social welfare
objectives (amal/khairat umum)
3.3 (i) and
(ii)
Benefits
The organisation must give services or benefits to the
Malaysian people regardlesss of race, religion and descent. Benefits cannot
accrue to one group only, including the board of directors, their families and
the staff of the organisation.
3.4
50% Use of
Funds Raised
The organisation must spend in the following year, at
least 50% of its income and donations to carry out activities that meet its
objectives.
3.5
Board of
Trustees
At least 50% of the board members must be outsiders
with no connection to the founder or the organisation.
3.6
Restriction
The organisation must not be involved in political or
trade union activities and does allow its funds, premises or staff to be used
for such purposes.
3.7
Financial
Statements
The financial statements need to have been audited by
a certified extermnal auditor and a copy needs to be submitted every year to
the DG of Inland Revenue. [Consolidated financial statements need to be
submitted for organisations which have registered branches].
3.8
Business
The organisation is allowed to carry out business on
condition that only 25% of its funds on the 1st day of the financial
year is utilised for this purpose. All proceeds need to be reinvested and used
to achieve the objective of the organisation or for specific
community-targetted works authorised by
the DG of Inland Revenue.
3.9
Amendments to
the Constitution
Any amendments to the Constitution requires the
approval of the DG prior to it coming into force.
3.10
Dissolution
Once an organisation is dissolved, all debts and
obligations need to be settled and the DG needs to be informed, etc .
3.11
Overseas
activities
The organisation is allowed to undertake charitable
activities overseas with the permission of the Finance Minister.
4 Amendments to
the Constitution
The organisation may be asked to amend its
constitution before its application for tax exempt status can be considered,
the amendment first needs to be approved.
5. Persons who
may apply :
Only the Presdient or the Secretary may apply for
approval.
6. Procedure to
apply :
For most organisations, all that is required is a
letter containing the relevant information.
6.1.2.Requirements:
- A copy of the ROS registration certificate
- A copy of the Constitution
- A list of members of the Exco containing names, addresses, IC numbers, employment details and positions held on Exco
- 2 years’ worth of financial statements if applicable
- A list of activities conducted to date if applicable, and
- A letter of support from the relevant department/Ministry
7. Application
to be addressed to:
Pengarah,
Jabatan Dasar Percukaian,
Lembaga Hasil Dalam Negeri,
Tingkat 17, Wisma Hasil,
Persatuan Rimba Permai,
Cyber 8.
Peti Surat 11833, 63000, CYBERJAYA, Selangor Darul
Ehsan
9. Deductions
& Exemptions
An organisation with tax-exempt status will enjoy the
following:
(i)
Donors may deduct their
donations from their taxable income as long as there is a receipt. Donations
can only be in cash and not in the form of goods.
(ii)
The organisation will be exempt
from tax on income (except for dividend income)
