TAX - Investment Holding Company (PR NO. 10/2015)

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Investment Holding Company

Definition of Investment Holding Company

- Main activities - Holding of investment (eg. Dividend, interest and rental - non business sources)

- Not less than 80% of gross income (Holding of investment)


Tax treatment under 60F(1) ITA

Formula: ~ A x B/4C


A - Total permitted expenses

B - Gross income consisting of dividend, interest and rent chargeable to tax 

C - Aggregate gross income


Permitted expenses:-

- Directors' fees

- wages, salaries and allowances

- management fee

- secretarial, audit and accounting fees, telephone charges, printing and stationary costs and postage; and

- rent and other expenses incidental to the maintenance of an office,


Definition of "business" holding of investment

- Letting of real property and provides maintenance services or support services.

*The real of property - owned/rented

*Maintenance services or support services - comprehensively and actively provided

*Detail can refer to PR No. 4/2011 - Income from letting of real property


Maintenance services or support

Doing generally all things necessary:-

(a) Interior: cleaning services, structural elements maintenance, water tanks, sewers, pipe and etc.

(b) Exterior: playing fields, recreational areas, car parks, open spaces, landscape areas, security services


Special circumstances:-

If a company is a non-IHC in a year of assessment but gross income from rental (business of holding of investment) decreases in the subsequent year or years of assessment due to temporary cessation of tenancy because of the following circumstances:

- Repair or renovation of the building;

- Absence of tenants for a period of 2 years after termination of tenancy;

- Legal injunction or other official sanction; or

- Other circumstances beyond the control of the company;

* The company is still deemed as a non-IHC for the subsequent year or years of assessment even though income from the holding of investment is not less than 80% of the gross income of the company.


Information from:

LHDN website

Income Tax Act 1967


For more information, find us on:Facebook: KJS & Associates

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