[ESG] Navigating Sustainability: SC Unveils Guide for Reporting
The Securities Commission of Malaysia has introduced a simplified guide to help board of directors effectively adopt the National Sustainability Reporting Framework (“NSRF”). This guide seeks to assist board members who may be unfamiliar with ESG principles by providing practical and actionable steps on critical areas such as governance and defining sustainability data boundaries.
If you have any queries, please contact ESG & Sustainability Practice Partner, Joyce Ong Kar Yee (oky@lh-ag.com).
[EMPLOYMENT] Special Alert: Goodwill and Clean Records Do Not Shield Employees from Dismissal
Can an employee’s goodwill and clean disciplinary record outweigh acts of dishonesty? The decision of the Industrial Court in Yum Kan Choong v Resort Villa Golf Course Berhad affirms that the falsification of invoices, is an act of misconduct serious enough to warrant dismissal, even where an employee has a spotless disciplinary record, and seemingly demonstrates remorse for such acts of misconduct.
In this alert, we summarise the key takeaways from the decision of the Industrial Court, which emphasises, among others, the importance of workplace ethics, and the heightened responsibilities of those occupying managerial roles.
If you have any queries, please contact Associate, Ashreyna Kaur Bhatia (akb@lh-ag.com), or her team Partner, Amardeep Singh Toor (ast@lh-ag.com).
[ESG] Giving the Living Wage
Recent developments in Malaysia’s wage policies represent progress, but do they align with broader ESG and sustainability goals?
This alert provides an overview of the living wage concept, highlights the limitations of current laws and policies in advancing the living wage, and offers insights on the way forward.
If you have any queries, please contact ESG & Sustainability Practice Partner, Tan Hooi Ping (hpt@lh-ag.com).
[TAX, CUSTOMS & TRADE] Tax Pulse: Court of Appeal Clarifies the Scope of Pioneer Status Tax Exemption Under the Promotion of Investments Act 1986
Merimen Online Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri
On 12 December 2024, the Court of Appeal (“COA”) set aside assessments raised by the Director General of Inland Revenue (“Revenue”) against the taxpayer, providing crucial clarification on pioneer status tax exemptions under the Promotion of Investments Act 1986 (“PIA”). The COA held that only “value-added income” is taxable and, therefore, exempted, while the “inflation-adjusted base income” is not taxable, as it does not constitute income under the PIA.
This decision reinforces the following foundational principles in tax law:
1. Tax is only imposed on income: Without income, there can be no tax liability.
2. Ambiguities in tax law must favour the taxpayer: Courts must resolve unclear provisions in favour of the taxpayer.
3. Differing interpretations do not amount to negligence: Taxpayers cannot be said to have acted negligently simply because they have adopted a different view than the Revenue.
In our latest alert, we explore the facts, arguments, and reasoning that shaped the COA’s decision.
The Taxpayer was successfully represented by Dato’ Nitin Nadkarni, Chris Toh Pei Roo, and Chang Jin Yee from Lee Hishammuddin Allen & Gledhill’s Tax, Customs & Trade Practice.
For inquiries regarding tax exemptions, assessments, or appeals, please contact the authors, Partner Chris Toh Pei Roo (tpr@lh-ag.com) or Associate Chang Jin Yee (cjy@lh-ag.com).
[TAX, CUSTOMS & TRADE] Tax Pulse: Too Little, Too Late: Insufficient and Belated Reasons for the Revenue’s Decision
On 4 November 2024, the High Court ruled in favour of Speed Modulation Sdn Bhd (“Taxpayer”), quashing RPGT assessments of almost RM14 million issued by the Director General of Inland Revenue (“Revenue”). This decision underscores the importance of transparency and accountability in tax administration and reaffirms the principle that taxpayers must be provided with timely and adequate reasons for decisions affecting them.
In this alert, we provide a concise overview of the facts and the parties’ respective contentions in the dispute.
The Taxpayer was successfully represented by Dato’ Nitin Nadkarni and Chris Toh Pei Roo from Lee Hishammuddin Allen & Gledhill’s Tax, Customs & Trade Practice.
For any inquiries regarding RPGT assessments or tax disputes, please contact the authors, Partner Chris Toh Pei Roo (tpr@lh-ag.com) or Associate Soon Jia Ying (jys@lh-ag.com).
[TAX, CUSTOMS & TRADE] Tax Pulse: SCIT Upholds Deductibility of Payments Arising from Legal Disputes Related to Business Operations
On 22.10.2024, the Special Commissioners of Income Tax (“SCIT”) ruled in favour of SB, a state-owned financial institution, allowing the deductibility of a RM10.5 million payment made pursuant to a Federal Court order for the Year of Assessment (“YA”) 2017. This decision highlights that the expenses related to legal disputes arising from the taxpayer’s business can qualify as deductible expenses under Section 33(1) of the Income Tax Act 1967 (“ITA”).
In this alert, we provide a concise overview of the Inland Revenue Board’s arguments, SB’s approach as well as the SCIT’s reasoning behind its decision.
The Taxpayer was successfully represented by Chris Toh Pei Roo and Soon Jia Ying from Lee Hishammuddin Allen & Gledhill’s Tax, Customs & Trade Practice.
If you have any queries regarding the tax deductibility of expenses or assessments issued by the Revenue, please contact Partner Chris Toh Pei Roo (tpr@lh-ag.com) or Associate Soon Jia Ying (jys@lh-ag.com).
[ESG] Enhancing Energy Efficiency in Malaysia: The EECA is Gazetted
The Energy Efficiency and Conservation Act 2024 (“EECA”) has officially been gazetted as law and will come into force on a date to be announced in the Gazette. The EECA mandates that significant energy consumers implement energy-saving measures and presents both challenges and opportunities for businesses to reduce energy costs and enhance sustainability.
If you have any queries, please contact ESG & Sustainability Practice Partner, Joyce Ong Kar Yee (oky@lh-ag.com), or Associate Kerryn Toh (ryn@lh-ag.com).
[EMPLOYMENT] Special Alert: Trade Unions’ Representative Capacity
Despite continuing to suffer substantial losses, the Company in this case was not quick to resort to retrenching its employees. It demonstrated utmost reluctance and restraint by continuously undertaking various cost-containment exercises, in order to stay afloat and keep its employees in employment. Prior to embarking on such exercises, the Company had even obtained consent from the union representing the affected employees. The Court in this case acknowledged the Company’s good faith in consulting the Union for consent on austerity measures, rather than seeking individual employee agreements. It held that the Claimants were never forced to resign from their positions but had, in fact, abandoned their employment.
If you have any queries, please contact Senior Associate, Arissa Ahrom (aa@lh-ag.com), or her team Partner, Shariffullah Majeed (sha@lh-ag.com).
[DISPUTE RESOLUTION] Special Alert: Can Liquidation Render an Arbitration Agreement Inoperative?
Arbitration agreements are common in standard form construction contracts. It is also common for construction contracts to include a clause that allows an employer to terminate the contract in the event the contractor goes into liquidation. If the contract containing the arbitration agreement is terminated on grounds of liquidation, does this also render the arbitration agreement inoperative?
In this alert, we discuss the recent Court of Appeal decision in Peninsula Education (Setia Alam) Sdn Bhd (previously known as Segi International Learning Alliance Sdn Bhd) v Biaxis (M) Sdn Bhd (in liquidation) [2024] 5 MLJ 388, which provides the answer to this question.
If you have any queries, please contact Senior Associate, Andrew Chang Weng Shan (cws@lh-ag.com), or his team Partner, Andrew Chiew Ean Vooi (ac@lh-ag.com).
[TMT] TECH Alert: Insight into Malaysia’s Newly Launched AI Governance & Ethics Guidelines
Malaysia has taken a significant step forward towards advancing artificial intelligence (“AI”) development and deployment in the country with the recent launch of the AI Governance & Ethics Guidelines. These Guidelines establish a comprehensive framework designed to guide stakeholders in the responsible adoption and implementation of AI technologies.
In this brief note, we share an overview of these Guidelines and their potential impact on industry stakeholders.
If you have any queries, please contact Associates Poh Jonn Sen (pjs@lh-ag.com) and Bryson Chee (ckt@lh-ag.com), or their team Partner, G. Vijay Kumar (vkg@lh-ag.com).