The government has introduced a goods and services tax (GST) to be implemented on Jan 1, 2007. Generally, only Malaysian-sourced income (i.e., income derived from or accrued in Malaysia) will be subject to Malaysian income tax. 3.3 Would there be any withholding tax on interest paid by a local company to a non-resident? The central bank handles foreign exchange controls and regulations 8.1 Are non-residents taxed on the disposal of commercial real estate in your jurisdiction? 3.4 Would relief for interest so paid be restricted by reference to “thin capitalisation” rules? Malaysia does not intend to implement any unilateral direct tax measures to specifically target the digital economy. However, the Ministry of Finance subsequently issued an exemption from the “substantial shareholder” requirements, which allowed tax losses to be carried forward even if there has been a substantial change in shareholders, except for dormant companies. Payments made to non-residents in respect of the provision of any advice, assistance or services performed in Malaysia and rental of movable properties are subject to a 10% WHT. If you own a business that is a tax resident company in Malaysia, meaning that its management and control are exercised in Malaysia, then you will be liable to pay corporate income tax. 2020. A company is regarded as an RPC if it is a controlled company and 75% or more of the value of its total tangible assets comprises of real property or shares in other RPCs. © All rights reserved. 9.4 Does your jurisdiction encourage “co-operative compliance” and, if so, does this provide procedural benefits only or result in a reduction of tax?
Malaysia maintains a liberal system of exchange controls that applies uniformly to transactions with its trading partners. Guidelines on the ESR, issued by the Inland Revenue Board (“IRB”), also clarify that the ESR is applicable to a person having interest expenses which are paid or payable to a third party outside Malaysia, where the financial assistance is guaranteed by its holding company or any other enterprises under the same multi-national enterprise group (regardless of the tax residence country of the guarantor).
The rates of this new tax has yet to be determined. The execution of some statutory documents relating to the incorporation process may be subject to stamp duty, such as the memorandum of association of the company. Royalty does not include payments in respect of the operation of oil or gas wells, or the extraction of mineral deposits or other natural resources. A treaty will take effect domestically once it has been ratified and the effective date has been declared by way of a statutory order.