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An (In)complete* Guide to Tax Incentives for the Performing Arts

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*Disclaimer: This guide is based on official if not always perfectly clear documentation. It is only for general informational purposes and must not be relied upon in any way as legal or tax advice. The questions in purple have been submitted to the Malaysian Tax Office for their clarification. In the meantime, readers who can help provide a better picture are encouraged to post their corrections/experiences below.[Photo credit: Got Credit]

The good news is that yes, in Malaysia, there are some tax incentives for the performing arts. The bad – and unfortunately too common – news is that these benefit companies, not individuals. So a company can claim deductions for sponsoring a ballet. Mere arts lovers who participate in crowd funding for the same ballet can only claim that they are awesome human beings.

Likewise, as a performer you have to pay full taxes on the meagre amounts most artists are paid. On the other hand, production companies get entertainment duty exemptions (which is a considerable percentage) for their earnings (which are usually meagre too). But only if it doesn’t take place in any Malaysian state .

The only individuals these tax laws do favour is creators. Playwrights, poets, artists, musicians, choreographers and comedians can claim a tax rebate for up to RM20,000 . While that’s something, the amount reflects the sadly prevailing attitude that creating is what you do when you aren’t earning real money at your real job.

Why you should know about these exemptions even if you are not a company

  1. It is easier to convince companies to sponsor your work. The term ‘tax exemption’ starts corporate salivary glands pumping, not just because it saves them money, but because it shows some degree of government approval. That’s what their world is built on.
  2. Because it’s not that hard for an individual or group to become a company.
  3. Because you will sound more knowledgeable when you write to your federal and state representatives, thanking them for supporting supporters, now how about supporting the artists and audiences as well?

 

What the laws say… and what (we think) they mean

For sponsors

What it saysHow you do itExample

Deduction of expenses up to RM500k for local companies sponsoring any local culture and arts activities.

The producer must give you a copy of the endorsement letter s/he received from the local council. You will submit this, along with your receipt for the amount sponsored (in cash or kind) to LHDN.

 

 

You are a fan of Instant Café Theatre’s latest performance and want to help it reach a wider audience (they’ve only performed in KL so far). You give them a cheque to pay for venues and advertising in Johor, Penang and Kota Kinabalu. Or you are a hotel chain and sponsor their accommodation in these cities. Or an airline and sponsor transportation, or a coffee shop that sponsors meals. Any of these makes you eligible.
Deduction of expenses up to RM200,000 for local companies sponsoring any foreign culture and arts activities.As above but you will also require the endorsement letter from the Ministry of Tourism and Culture (MOTAC). Based on industry experience, Arteri recommends that you write to MOTAC well in advance – at least six months before your planned event and always follow up the letter (or fax or email) with a phone call to ensure it’s been received and another call every week after that to check on progress.A similiar situation as above, but this time you’re helping bring in Tommy Emmanuel from Australia, the Bolshoi Ballet from Russia, or Checkpoint Theatre from Singapore.

For creators

Tax exemption on income from royalty on literary and artistic work (up to RM20,000).

Is there a place to claim this on their tax form? Just under deductions? And do they need to specify which one?

Note that in schedule 6 of Income Tax Act 1967, Para 32 is for “the publication of, or the use of or the right to use, any artistic work (other than any original painting), and from royalty in respect of recording discs or tapes.” And 32B is for “royalty (other than royalty in respect of recording discs or tapes) or payment in respect of the publication of, or the use of or the right to use, any literary work or any original painting.”

You are a choreographer showing your work at Performing Arts Market Seoul. Three dance troupes express interest in doing live performances of your routine. You do not have to pay taxes on the first RM20,000 they pay you.
Tax exemption on income from any music composition or translation (up to RM20,000). Does translation mean language or adaptation? Eg. A Wagner concerto re-written for Chinese string instruments? Or La Boheme translated into Bahasa?
Tax exemption on income from cash awards receivable from the Government or State Government or a local authority.What does writer or artist encompass? Performing artists, choreographers, producers, set designers? Do cash awards include prize money, scholarships, grants, etc.? 

For performers(?)

Tax exemption on income from cash awards receivable from the Government or State Government or a local authority.What does writer or artist encompass? Performing artists, choreographers, producers, set designers? Do cash awards include prize money, scholarships, grants, etc.? 

For artistic companies

Deduction on expenditure incurred by companies promoting and managing musical or cultural group and foreign performance (endorsed by Ministry of Tourism and Culture-MoTAC).

The application has to be endorsed by MoTAC and then submitted to MOF.

By companies, do they mean registered companies? What about a dance troupe?

 

 

Entertainment duty exemption on concerts, cultural and heritage performances at these venues:

· Komplex Sukan Negara

· Istana Budaya

· Balai Seni Lukis Negara

· Dewan Filharmonik Petronas

· Kompleks Sukan Bukit Kiara

Does this mean that any money that the production company makes from ticket sales at these venues are tax exempt? Or money earned by the venue? How about money earned by individual performers? 
Entertainment duty exemption on theatre stage shows within KL, Putrajaya and Labuan.What is the definition of theatre stage shows? Can this exemption apply to concerts or cultural performances? 
Entertainment duty exemption on charity stage shows.Including money for costs or only money that goes directly to the charity? Can private individuals and companies claim exemptions from sponsorship in money or kind? E.g. sponsoring photography, costumes, meals, etc. 
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Amy De Kanter
Amy De Kanter

Former Chief Editor, frequent contributor and enthusiastic audience member, Amy is thrilled to have a job that lets her do three of the things she loves most.