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

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

Updated guidelines on tax deduction under Section 34(6)(h) of the ITA for contributions to a charity or community project to tackle the COVID-19 pandemic.

Under the National People’s Well-Being and Economic Recovery Package (PEMULIH), the Government announced that the scope of tax deductions allowed for contributions to approved COVID-19 related community and charitable projects would be expanded to include contributions to vaccination centres (PPVs) (see Special Tax Alert No. 5/2021).

Following the above, the MoF has issued updated Guidelines, in Bahasa Malaysia, titled “Garis Panduan Khas Permohonan Potongan Cukai Pendapatan Bagi Projek Komuniti / Amal Untuk Menangani Wabak COVID-19” (Guidelines) dated 2 August 2021.

Like the earlier guidelines, the new Guidelines explain the criteria and procedures to apply for a tax deduction under Section 34(6)(h) of the ITA for the above-mentioned contributions. Some of the key changes are outlined below. 

• Qualifying contributions now include:

•       Air purifiers or filtration equipment

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

•       Rental costs for the provision of temporary infrastructure (e.g. marquee tents)

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

• Qualifying recipients now include:

•       Universities and educational institutions

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

• For tax deductions in respect of contributions to PPVs:

•       The deductions apply to contributions made from 19 April 2021 until the date the pandemic is declared by the Government to have ended.

•       Tax deductions can be made from YA 2021.

•       An application for deduction will need to be submitted to the MoF within 30 days from the date the contribution is made.

• A checklist of documents to be submitted together with the application for tax deduction under Section 34(6)(h) is outlined in Appendix A of the Guidelines.