PR 3/2011 Investment Holding Companies (IHC)

A company whose activities consists 80% of its gross income is derived from holding of investment (interest, dividend, rental). In relation to rental income, rental which is derived by providing maintenance or support services are excluded from being treated as investment income

Determination of an investment holding company
a) its main activity is the holding of investments;
b) not less than 80% of the company’s gross income (whether exempt or not) is derived from the holding of those investments.

Permitted expenses incurred by IHC under Section 60F
1)Director’s fees
2)Wages, salaries and allowances (EPF & Socso not included)
3)Management fees
4)Secretarial, audit and accounting fees, telephone charges
5)Printing and stationery costs and postage
6)Rent and other expenses incidental to the maintenance of an office

A x B/4C

A = permitted expenses
B = gross income (dividend, interest and rental)
C = aggregate of the gross income

Amount allowable as deductible should be lower of A x B/4C or 5% of total gross income (C)

- income of IHC listed in Bursa Securities will be treated as business income , given full tax deduction

Public Ruling No. 3/2011_10/03/2011
Malaysia Master Tax Guide 2009 – Pg 13-570