Nr_taxation of Non Resident Persons in Malaysia-updated May2013%29

8/19/2019 Nr_taxation of Non Resident Persons in Malaysia-updated May2013%29

http://slidepdf.com/reader/full/nrtaxation-of-non-resident-persons-in-malaysia-updated-may201329 1/34

1

By :

NOR AZIZAN ADNAN

NON RESIDENT BRANCH

INLAND REVENUE BOARD OF MALAYSIA

TAXATION OF NON RESIDENT PERSONS IN MALAYSIA



A NON RESIDENT PERSON

(includes an individual and a corporation)

SHALL BE CHARGED TO TAX ON INCOME

ACCRUING IN OR DERIVED FROM MALAYSIA

2




NON RESIDENT INDIVIDUAL IS NOT ENTITLED TO

ANY PERSONAL RELIEF AS ENJOYED BY A

RESIDENT

GENERALLY TAXED AT 26 EXCEPT FOR INCOME

WHICH IS SUBJECT TO WITHHOLDING TAX RATE

LIKE INTEREST, ROYALTY, TECHNICAL FEE OR

PUBLIC ENTERTAINER

4




5




6




BUSINESS

PROFESSIONAL INCOME TAXED AT 26 ON NET

PROFIT

NON RESIDENT DIRECTOR (EMPLOYMENT) OF A

MALAYSIAN RESIDENT COMPANY IS ALSO

TAXED AT 26

7




RENDERED / PERFORMED SERVICES IN

MALAYSIA:

◦

CONTRACT OF SERVICES (EMPLOYMENT)

◦ CONTRACT FOR SERVICES (INDEPENDENT

PERSONAL SERVICE)

◦

FOREIGN ARTISTES/ PUBLIC ENTERTAINERS

8




EMPLOYMENT

◦ GENERAL RULE :

Employment income is taxed in the State /

jurisdiction in which the employment is exercised

(i.e. State of source)

◦ EXCEPTION :

Employment exercised aboard a ship or aircraft

operated in international traffic – taxed in the

jurisdiction in which place of effective

management is situated

9




EXERCISE OF EMPLOYMENT

◦

Refers to physical presence when performing

duties

◦ Regardless of when or where the remuneration is

paid

10




EMPLOYMENT

◦ TAX AT 26

◦EXEMPTION IF EXERCISED IN MALAYSIA NOT

EXCEEDING 60 DAYS

◦ DTA COUNTRIES:

EXEMPTION UNDER DEPENDENT SERVICE

ARTICLE (DPS) IF ALL THE FOLLOWING

CONDITIONS APPLICABLE:

11




3 CONDITIONS :

1. LESS THAN 183 DAYS IN MALAYSIA

2. REMUNERATION PAID BY FOREIGN EMPLOYER

NOT RESIDENT IN MALAYSIA AND

3.

THE REMUNERATION IS NOT BORNE BY A P.E.

WHICH THE EMPLOYER HAS IN MALAYSIA

12




In Malaysia <60 days

Malaysian

Employer exempted

Foreign

Employer

(P.E. exists) exempted

Foreign

Employer

(No P.E.) exempted

13

<182 days >182/183 days

flat rate 26% scale rate

flat rate 26% scale rate

Exemption scale rateUnder DTA




14

Chargeable Income Calculations (RM) Rate % Tax(RM)

0-2500 On the First 2,500 0 02,501-5,000 Next 2,500 1 25

5,001-10,000 On the First 5,000

Next 5,000 3

25

150

10,001-20,000 On the First 10,000

Next 10,000 3

175

300

20,001-35,000 On the First 20,000

Next 15,000 7

475

1,050

35,001-50,000 On the First 35,000

Next 15,000 12

1,525

1,800

50,001-70,000 On the First 50,000

Next 20,000 19

3,325

3,800

70,001-100,000 On the First 70,000

Next 30,000 24

7,125

7,200

Exceeding 100,000 On the First 100,000

Next RM 26

14,325

MALAYSIA TAX SCALE RATE




INDEPENDENT PERSONAL SERVICES INCLUDES

INDEPENDENT PROFESSIONAL ACTIVITIES OR

VOCATION LIKE, JOCKEYS, FILM DIRECTOR,

CHEF, ETC

TAX AT 26 ON NET INCOME

15




TECHNICAL FEES:

◦PROVISION OF ANY SERVICES OF TECHNICAL,

MANAGERIAL OR CONSULTANCY NATURE IN

MALAYSIA IN THE ABSENCE OF A P.E. IS

SUBJECT TO A WITHHOLDING TAX OF 10 ON

GROSS

◦OR LOWER DTA PREFERENTIAL RATE

16




FOREIGN ARTISTES / PUBLIC ENTERTAINERS OR

SPORTSPERSON :

SUBJECT TO A FINAL WITHHOLDING TAX OF 15

ON GROSS PAYMENT

17




INTEREST:

◦ SUBJECT TO A WITHHOLDING TAX OF 15

ON GROSS

◦ OR LOWER DTA PREFERENTIAL RATE

◦ INTEREST PAID BY ANY BANK OR FINANCE

COMPANY IN MALAYSIA AND RECEIVED BY

A NON RESIDENT PERSON IS EXEMPTED

FROM TAX

18




ROYALTY :

◦ SUBJECT TO A WITHHOLDING TAX

OF 10 ON GROSS

◦OR LOWER DTA PREFERENTIAL RATE

4(f) INCOME :

◦ SUBJECT TO A WITHHOLDING TAX

OF 10 ON GROSS (wef 1.1.2009)

19




DIVIDEND:

◦ INCOME RECEIVED FROM MALAYSIAN

DIVIDEND IS NOT TAXABLE

(wef YA 2008)

(ONE-TIER CORPORATE TAX SYSTEM)

20




Rental income from immoveable

properties situated in Malaysia is taxed at

26 on net profit.

Expenses deductible against gross rental

same as any other resident individual.

21




Rental from moveable property taxed at

10 on gross

or

DTA preferential rate applies

Example:

Chartered hire fees on ships or oil rigs,

heavy machinery etc.

22




23

DOUBLE TAXATION

AGREEMENT DTA)

If an income is doubly taxed, the taxsuffered or paid in the foreign country isallowed as a tax credit against the Malaysian

tax payable on the same income

Bilateral credit : with DTA

Unilateral credit : without DTA




24

S 132 relief only allowed to a resident taxpayer

Income must be doubly taxed

Tax relief cannot exceed the Malaysian tax computedon the doubly taxed income

Computed tax relief compared with actual foreign taxsuffered and the lower of the two amounts given as

the relief

BILATERAL CREDIT




25

Example :

A taxpayer has income for a year of assessment ofRM50,000 which includes income from a foreign source of

RM10,000 (foreign tax RM500). The Malaysian tax chargedon the total income of RM50,000 is RM2,000.

The S 132 relief cannot exceed : 2000 X 10,000 = RM40050,000

BILATERAL CREDIT




26

S 133 relief can be claimed by Resident or NonResident individual

Income must be doubly taxed

Relief is the lower of : Malaysian tax on the foreign income, and One half of the foreign tax on the doubly taxed

income

UNILATERAL CREDIT




27

Example:

Same as the bilateral credit example BUT the foreignincome is from a country without DTA

Proportion of Malaysian Tax : RM400

Foreign tax : RM500

Therefore, S 133 relief : ½ of RM500

UNILATERAL CREDIT




LIABLE TO MALAYSIAN TAX ON PROFITS WHICH

ARE ATTRIBUTABLE TO THE PERMANENT

ESTABLISHMENT

NO DEFINITION OF P.E. UNDER THE DOMESTIC

LEGISLATION BUT DEFINED UNDER DOUBLE

TAXATION AGREEMENT (DTA)

29TAXATION OF NON RESIDENT PERSONS IN MALAYSIA



INCOME RECOGNITION AND TREATMENT OF

EXPENSES RE B SED ON THE RM’S LENGTH

PRINCIPLE

ALL OUTGOINGS AND EXPENSES WHOLLY AND

EXCLUSIVELY INCURRED FOR THE PURPOSES OF

THE P.E. IS ALLOWABLE.

MAY ACCEPT ANY REASONABLE METHOD OF

ALLOCATION OF HEAD OFFICE EXPENSES

DEPENDING ON THE NATURE OF BUSINESS




INCOME FROM CONTRACT PROJECT CARRIED

ON, CARRIED OUT AND PERFORMED IN

MALAYSIA IS SUBJECT TO:

AN INTERIM WITHHOLDING TAX OF 10 + 3

ON SERVICE PORTION OF THE CONTRACT




10 IS THE ADVANCE TAX DEPOSIT ON

ACCOUNT OF THE COMPANY

3 IS THE GUARANTEE DEPOSIT ON ACCOUNT

OF THE EXPATRIATE EMPLOYEES

**THIS INTERIM WITHHOLDING TAX WAS

INTRODUCED TO ENSURE BETTER TAX

COMPLIANCES




COMPREHENSIVE WITHHOLDING TAX SYSTEM

EASY COMPLIANCE AND LOW TAX RATES

FINAL WITHHOLDING TAX, NO OBLIGATION TO

FILE TAX RETURNS




Thank [email protected]

TAXATION OF NON RESIDENT

Nr_taxation of Non Resident Persons in Malaysia-updated May2013%29

Documents

Transcript of Nr_taxation of Non Resident Persons in Malaysia-updated May2013%29