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Taxation in Malaysia: What is tax law?

Tax law is found in many places - tax law is generated by the federal government, state government as well as counties, cities, and other municipalities. The variety of taxes that everyone faces is staggering - tax law affects almost every aspect of your life.

INTRODUCTION


Generally, all income of companies and individuals accrued in, derived from or remitted to Malaysia are liable to tax. However, income remitted to Malaysia by resident companies, non-resident companies (other than companies carrying on the business of banking, insurance, air and sea transportation) and nonresident individuals are exempted from tax.

Apart from income tax, there are other direct taxes such as real property gains tax, and indirect taxes such as sales tax, service tax, excise duty and import duty.

Currently, income tax is assessed on the income earned in the preceding year according to the Official Assessment System.

As a measure to modernize and streamline the tax administration system, the assessment of income tax will be changed to the current year assessment from the year 2000. The present Official Assessment System will be changed to the Self-Assessment System in stages as follows:-
GroupYear of Implementation
Companies 2001
Business, Partnerships and cooperatives2003
Salaried group 2004


To facilitate the changeover, all income received in 1999 will be waived from income and losses incurred in 1999 will be allowed to be carried forward.

Agreement for the Avoidance of Double Taxation


Agreements for the Avoidance of Double Taxation provide for the avoidance of incidence of double taxation on income such as business profits, dividends, interest and royalties that are derived in one country and remitted to another country. To-date, Malaysia has signed such tax treaties with the following countries (by alphabetical order):
Albania 
Argentina
(limited to shipping and
air transport)
Australia
Austria
Bangladesh
Belgium
Canada
China
Czech Republic
Denmark
Egypt
Fiji
Finland
France
Germany
Hungary
India
Indonesia
Iran
Italy
Japan
Jordan
Korea, Republic of Kuwait
Malta
Mauritius
Mongolia
Netherlands
New Zealand
Norway
Pakistan
Papua New Guinea
Philippines
Poland
Romania
Russia
Saudi Arabia (limited to shipping and air transport)
Singapore
Sri Lanka
Sudan
Sweden
Switzerland
Thailand
Turkey
United Arab Emirates
United Kingdom
United States of America (limited to shipping and air transport)
Vietnam, Socialist
Zimbabwe


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Notes
Knowledge Base ID :   1334
Last Reviewed :   May 31, 2001

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