Limited Liability Partnership ("LLP")
有限合伙企业
LLP TAXATION AND ACCOUNTING
LLP's tax framework is a hybrid of convention partnership and company.
Of course there are benefits as compared to conventional partnership
Sales Tax and Service Tax ("SST") is definitely an area of concern and it will affect ALL businesses regardless of your structure or size.
LLP Accounting
What are the penalties should an LLP failed to prepare its accounts to give a true and fair view of the state of affair of the LLP? (Please check it out!)
The LLP and every partner of the LLP that commits such an offense is liable to a fine not exceeding RM50,000 or to imprisonment for a term not exceeding 6 months or to both
LLP is a separate legal entity like company. Therefore, fixed assets can now be held by LLP as compared to conventional partnership. Therefore, LLP can acquire motor vehicle under hire purchase by themselves.
INCOME TAX
Deductible Expenses
Partners' salary
Partners' salary amount need to state in the partners' agreement. Only can claim to the maximum of amount stated.
Repair and maintenance
Need to distinguish repair maintenance and capital expenditure.
Repair maintenance within 6 months period from date of acquisition will be consider as capital in nature.
Repair and maintenance shall be restate the original condition of the asset. Any improvement shall be treated as capital in nature.
Double deduction available
Freight charges from East Malaysia transport goods to West Malaysia
Staff childcare
Incorporation Expenses
Capital not exceeding RM2.5 million shall be allowed a deduction.
SST Corner
Areas to look out for:-
SST registration:-
Will LLP be exempted from registration?
If you are supplying exempted goods or providing non-prescribed service, then you need not register.
LLP non SST registrant:-
Will purchases with SST increase the cost of business?
LLP has to absorb the SST as part of their cost. However, LLP non-sales tax registrant may apply for voluntary registration in order to enjoy the sales tax facilities.
Income Tax Rate
It is 17% for SME (YA 2019 onwards) with capital below RM2.5 million upto chargeable income of RM500,000. Thereafter, a tax rate of 24% is apply to the profit exceeded RM500,000.
Distribution Of Profit after Tax
Wlll the above subject to personnal tax or tax free in the hand of recipient? Yes, it is tax free.