Frequently Asked Questions on Special Income Remittance Programme Frequently Asked Questions on Special Income Remittance Programme Frequently Asked Questions on Special Income Remittance Programme

Further to the media announcement made by the Malaysian Inland Revenue Board (“MIRB”) on 16 November 2021 to introduce a Special Income Remittance Programme (“SIRP”), the long awaited Frequently Asked Questions (“FAQs”), which are currently only available in the Malay Language, have been released by the MIRB on 17 December 2021.  The SIRP is introduced following the repeal of the tax exemption for foreign sourced income received in Malaysia, from 1 January 2022.

Under the SIRP, a tax rate of 3% is accorded on the gross amount remitted into Malaysia by any resident person from 1 January 2022 to 30 June 2022.  It covers all types of taxable foreign source income which was kept abroad, including unreported Malaysian source income, in Year of Assessment (“YA”) 2020 and prior YAs.  Capital gains are not covered in the SIRP as capital gains are generally outside the scope of the Income Tax Act 1967.

Amongst others, the notable points from the FAQs include:

1. The income from outside Malaysia is considered “received in” Malaysia when it is remitted / brought / transferred into Malaysia physically or through the banking system.
2. Declaration of the income remittance can be made online using a form prepared by the MIRB which can be accessed from MyTax starting 1 January 2022.  The declaration must be made on or before 30 July 2022.
3. Bilateral or unilateral relief is available where the same income is subjected to both Malaysian and foreign tax.

In line with the MIRB’s earlier media announcement, the declaration made by the taxpayer in the SIRP will be accepted in good faith without any tax audit or investigation being carried out.

Apart from the declaration made under the SIRP, the taxpayer is required to report the remitted amount in the relevant tax return(s).  The taxpayer could revise its estimated tax payable in the 6^th / 9^th or special 11^th month of the basis period (for those under CP204) or before 30 June 2022 (for those under CP500), to take into account the tax payable on the remitted amount.  Where no revision is made, the taxpayer is required to remit the balance of tax payable (net of the tax instalments paid) on or before the statutory or extended submission deadline of the tax return for the relevant YAs.  However, it may trigger penalties on underestimation of tax payable.

Once the Programme expires, the MIRB has indicated that it will scrutinise information on funds kept overseas by Malaysian resident persons under the exchange of information agreement with foreign countries.  Where taxpayers are found to be under-declaring their Malaysian sourced income kept overseas, additional assessments together with the incorrect return penalties could be raised by the MIRB.

A copy of the MIRB’s FAQs can be accessed via the above link.

Should you have any questions or require further clarification, please do not hesitate to email or contact any of our Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organization.