Effective Jan 1, 2022, a proposal to remove the tax exemption on income derived from foreign sources and received in Malaysia by Malaysian residents under Paragraph 28, Schedule 6 of the Income Tax Act 1967 was announced in the recent Budget 2022.

Accoridng to KPMG in Malaysia’s Executive Director of Corporate Tax, Nicholas Crist, “What should be highlighted here is that this only applies to income. Capital gains that are not taxable in Malaysia will not be subject to tax. A transitional tax rate of 3% is accorded on the gross amount received in Malaysia from Jan 1, 2022, to June 30, 2022, and this is likely to encourage early remittance.

Moving forward, where a taxpayer’s foreign-sourced remittances consists of income that is both revenue and capital in nature, it would be crucial to identify and segregate the income in order for the appropriate tax treatment to be taken.”

Read the full article via the link below or click here to view pdf.

The Malaysian Reserve: Tax companies, not individuals on foreign-sourced income