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17. Double Taxation Agreements
Malaysia has signed 58 double taxation agreements with
the following countries:-
| Albania |
Myanmar |
| Arab Republic of Egypt |
Namibia |
| Argentina |
Netherlands |
| Australia |
New Zealand |
| Austria |
Norway |
| Bahrain |
Pakistan |
| Bangladesh |
Papua New Guinea |
| Belgium |
People's Republic of China |
| Brunei |
Philippines |
| Canada |
Poland |
| Denmark |
Republic of Czech |
| Federal Republic of Germany |
Republic of Korea |
| Fiji |
Romania |
| Finland |
Russia |
| France |
Saudi Arabia |
| Hungary |
Singapore |
| India |
South Africa |
| Indonesia |
Sri Lanka |
| Ireland |
Sudan |
| Islamic Republic of Iran |
Sweden |
| Italy |
Switzerland |
| Japan |
Thailand |
| Jordan |
Turkey |
| Kazakstan |
United Arab Emirates |
| Kuwait |
United Kingdom |
| Malta |
United States of America |
| Mauritius |
Uzbekistan |
| Mongolia |
Vietnam |
| Morocco |
Zimbabwe |
The agreements recently signed with Ireland, Uzbekistan, Jordan,
Japan and Myanmar are not yet in force pending ratification. The Double Taxation
Relief (the Government of Japan) Order 1999 will replace the Double Taxation Relief
(Japan) Order 1971 once it is ratified.
18. Protocol Amending the Australia / Malaysia Tax
Treaty
A protocol amending the comprehensive tax treaty was signed
by the Governments of Australia and Malaysia on 2nd August, 1999. The principal changes
to the treaty include:-
- The elimination of double taxation currently facing Australian
residents who receive fees for technical services from Malaysian residents;
- The extension of period within which "tax-sparing" relief
is available to Australian residents in relation to certain types of income that
are exempted, either wholly or partially, from Malaysian tax; and
- The inclusion of anti-avoidance provision in respect of the disposal
of shares, partnership or trust interests, the value of which is principally attributable
to land.
Under the protocol, an enterprise of Australia may not be subject
to Malaysian tax for providing technical or consultancy services to Malaysia, unless
such services are rendered in Malaysia and the services continue for a period or
periods aggregating more than 3 months within any 12-month period.
The protocol will come into force after the last of the necessary procedures to give
it the force of law in both countries has been completed.
19. Taiwan / Malaysia
By virtue of the Income Tax (Exemption) (No 10) Order 1998,
a person who is a resident of TECO is exempt from tax on the following income:-
Business Income
- Profit of an enterprise of TECO that carries on business in Malaysia
not through a permanent establishment situated therein.
- Profits from operations of ship or aircraft in international traffic,
including rental of ships or aircraft, containers and related equipment.
Interest
33 1/3% of the gross interest income is exempt.
Technical Fee
25% of the gross fee is exempt.
Income from Employment
Employment income is exempt if the employment exercised in Malaysia is for a
period(s) of less than 183 days in the calendar year and the remuneration is paid
by or on behalf of an employer who is not a resident of Malaysia and the remuneration
is not borne by a resident or a permanent establishment which the employer has in
Malaysia.
The above order arose from the agreement in 1996 between TECO and the Malaysian Friendship
and Trade Centre to seek approval from their respective authorities for the avoidance
of double taxation, exemption and other matters relating to taxation.
In addition, under the Income Tax (Exemption)(No. 11) Order 1998 an individual, or
a company carrying on the business of banking or insurance who is resident in Malaysia,
is exempt from tax in respect of income received or derived from TECO, where such
income has been subject to tax in TECO, for a basis period for a year of assessment.
The amount of tax that would be exempt is to be determined as follows:-
|
Income from TECO
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|
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---------------------------
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x Total Tax |
|
Total Income
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TECO refers to the area represented by the Taipei Economic and
Cultural Office in Malaysia.
The Order was gazetted on 24th May, 1998 and has effect from the
year of assessment 2000.
Indirect Tax
1. Abolition of Import Duties
In line with the Government's efforts to promote Malaysia
as a shopping destination, import duties of several goods were abolished. These include
leather based products ranging from briefcase, clutch bags, handbags to footwear.
The abolition was announced in Gazette No. P.U. (A) 206 effective from 22nd May,
1999.
In addition, import duties of another 39 items ranging from winter clothing, shawls,
scarves, ties, bows to handkerchiefs were abolished as published in Gazette No. P.U.(A)
330 effective from 12th August, 1999.
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