subject taxation

The Venture Group of companies (Venture) has been established by a group of several entrepreneurs to undertake investments in Malaysia. Venture has not been granted any tax incentives so far. There are three wholly-owned Malaysian tax resident subsidiaries in Venture, each of which derives income from a single principal activity. The profile of these subsidiaries is as follows:

Aster Sdn Bhd is a reputable manufacturer of a retailer product, which constantly attains a value added of 32% to 38%. The company has just ventured into the export market to Asia Pacific and expects an annual increase in export sales of 25% in 2020. In 2019, its exports stood at RM2 million out of total annual sales of RM7 million.

Beta Sdn Bhd has been manufacturing clinical products for the past six years. In 2020 it plans to invest RM7 million to expand its operations in order to achieve increased output.

Question 4 (Continued)

Dail Sdn Bhd is a newly-incorporated company which is to undertake a tourism business, a promoted activity. This business is expected to be profitable within three months after its commencement and to generate an annual statutory income of RM20 million.

Required:

Determine, giving reasons, which incentive measure is the most suitable for each of the companies:

(a)Aster Sdn Bhd

(b)Beta Sdn Bhd

(c)Dail Sdn Bhd.

For each recommended incentive measure, state the respective pre-requisites which needs to be satisfied and explain the incentive mechanism, supported by relevant computations, where necessary.