| (a) |
|
Royalty (Article 12) |
| |
|
The definition of royalty has been
expanded to include payment for the use in connection with television, radio or other
broadcasting, or the right to use in connection with such broadcasting, visual images
or sounds, or both, transmitted by :
| i) |
|
satellite; or |
| ii) |
|
cable, optic fibre or similar technology |
The exemption on approved industrial royalty is no longer available as the relevant
paragraphs have been deleted. |
| |
|
|
| (b) |
|
Associated Enterprises (Article
9) |
| |
|
The Article has been amended to provide
for appropriate corresponding adjustments to avoid double taxation in situations
where associated enterprises are deemed dealing not at armís length. The competent
authorities are to consult each other before determining such an adjustment. |
| |
|
|
| (c) |
|
Dividend (Article 10) |
| |
|
Previously, dividend paid by a company
resident in Australia to a resident of Malaysia is subject to a 15% tax on gross.
Under the Protocol, no Australian tax will be charged on "franked" dividend
if the person entitled to the dividend is a company holding at least 10% of the voting
power in the Australian company.
Where the above does not apply, the tax imposed by Australia shall not exceed 15%
of the gross dividend. Malaysia does not impose tax on the payment of dividend. |
| |
|
|
| (d) |
|
Elimination of Double Taxation
(Article 23) |
| |
|
For the purpose of tax sparing, the
term "Malaysian tax forgone" shall not be deemed to have been paid in respect
of income from:
| i) |
|
banking, insurance, consulting, accounting,
auditing or similar services; or |
| ii) |
|
the operation of ships or aircraft
other than operated from places in Malaysia for a Malaysian business; or |
| iii) |
|
any scheme using Malaysia as a conduit
or location for income to avoid Australian tax through the exploitation of Australian
tax credit provisions. |
The above has retroactive application for year of assessment beginning on or after
1st January, 1993.
It is to be noted that under the Protocol, the tax sparing provisions will cease
to apply after the year of income ending on 30th June, 2003. |
| |
|
|
| (e) |
|
Limitation of Relief (Article
27) |
| |
|
The Article has been amended to provide
that persons who enjoy a particular tax treatment under a law of a Contracting State
which has been identified in an exchange of letters between the States, shall not
be entitled to any benefit of the treaty.
In this regard, the Malaysian Government has through an exchange of letters, accepted
Australia's proposal that persons carrying on any offshore business activity under
the Labuan Offshore Business Activity Tax Act 1990 (as amended), shall not
be entitled to the benefit of the treaty. |
| |
|
|
| (f) |
|
Effective Date |
| |
|
The amendments will be effective
in respect of Malaysian tax for any year of assessment beginning on or after 1st
January in the year next following that in which the Protocol enters into force.
We understand that the exchange of notes between the Contracting States has not been
completed. |
