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.


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



x Total Tax

Total Income


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.


This report is reproduced with permission from Kassim Chan Tax Services Sdn Bhd (36421-T) and Deloitte Touche Tohmatsu Tax Services Sdn Bhd (151497-P).
Address: Level 16, Uptown 1, 1 Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Malaysia.
Tel: (603) 715 1888, Fax: (603) 715 7768, (603) 715 7769
tax@kassimchan.com.my / tax@deloitte.com.my

No part of this report may be reproduced in any form without the prior consent of Kassim Chan Tax Services Sdn Bhd and Deloitte Touche Tohmatsu Tax Services Sdn Bhd.

Another Malaysian resource site designed and hosted by MIR Communications Sdn Bhd.