 TAX IN MALAYSIA

• Charged by Malaysian Revenue Board (MIRR).

• Malaysia has a territorial basis of taxation
• Any income accrued in or derrived from Malaysia is taxable in Malaysia
• The Income Tax Act 1967

 DOUBLE TAX
• Public Ruling No 11/2011 on Bilateral credit and unilateral credit ↔ Provision on ITA 1967 in section
7, 8, 131, 132, 133, Schedule 6 and Schedule 7
Double Tax Avoidance in Malaysia • DTAA mostly adopted OECD Model
Convention and few from UN Model
Double Tax Convention
• Eligibility to claim
Public Ruling No
Bilateral Unilateral
11/2011 Must be a tax resident in Where an employee pays
Malaysia for the basis period Malaysian tax and foreign tax
for a year of assessment in respect of any income from
an employment exercised
Under Section 132 outside Malaysia, unilateral
Under Section 133
of ITA 1967 of ITA 1967 credit is claimable regardless
of whether the employee is a
tax resident in Malaysia or not
Applicable where
DTAA exists
Applicable where
DTAA does not exists
• Computation
Bilateral Unilateral
Foreign tax charged on the Half (1/2) of the foreign tax
Bilateral credit Unilateral credit income that is subject to charged on the foreign income
double taxation, whichever is that is subject to double
lower. taxation, whichever is lower.
DTAA INDONESIA AND MALAYSIA
1. Taxes covered
INDONESIA MALAYSIA
The income tax 1) The income tax and excess profit tax
2) The suplementary income tax, that is development, and
3) The petroleum income tax

2. Shipping and Air Transport (Article 8)

Profits derived from the operation of ships or aircraft in international traffic shall be taxable only in the
Contracting State in which the place of effective management of the enterprise is situated.
Notwithstanding the provisions of paragraph 1, profits derived by an enterprise of a Contracting State
from the operation of ships in international traffic may be taxed in the other Contracting State, but the
tax imposed in that other State shall be reduced by an amount equal to 50% thereof

Notwithstanding the provisions of paragraphs 1 and 2 and Article 7, profits derived by an enterprise of
a Contracting State from a voyage of ships or aircraft where the principal purpose of the voyage is to
transport passengers or goods between places in the other Contracting State shall be taxed in that
other State.