Malaysia has concluded approximately 74 effective double taxation treaties (DTAs). Information on the different withholding tax rates on interest, royalties and technical charges can be found under “DTA contractual rates”. Each payment method has different withholding tax rates and may benefit from a preferential tax rate if there is a double taxation treaty between Malaysia and the country where the non-resident (foreign party) is resident for tax purposes. The table below presents the relevant forms for various withholding tax payments in Malaysia. When making payments for digital services, it is important to distinguish between payments for services and royalty payments. This is because payments for services and payments for royalties have different effects on withholding tax. Payments for services are subject to withholding tax only if the services were provided in Malaysia. Interestingly, although Anthony inadvertently obtains his tax residency in Malaysia, country X`s national tax laws could still consider him a tax resident in that country. The issue of dual residence is resolved by the tie-breaker rule in the relevant tax treaty. Anthony will likely end up becoming a tax resident in country X, for contractual purposes.

However, he will not be eligible for the 183-day waiver due to his extended stay in Malaysia. Essentially, it will be taxable both in country X and Malaysia. That is how complex international taxation is. If possible, it is best to avoid this complication. “Public Artist” means a performing, radio or television performer, musician, athlete or person engaged in a profession, vocation or employment of a similar nature. Remuneration or other income in respect of services provided or provided in Malaysia by a non-resident public artist is subject to withholding tax at the rate of 15% on the gross payment. The current practice continues, whereby the sponsor of the non-resident public artist must pay a 15% withholding tax before an entry permit for the non-resident public artist can be obtained from the Immigration Directorate. Other – A withholding tax of 10% applies to the rental of movable property, technical fees for services provided in Malaysia and certain one-off income paid to non-residents. which may be reduced under existing tax treaties.

Contract payments made to non-resident contractors in respect of services provided under a contract are subject to withholding tax at the rate of: The payer does not pay withholding tax at the prescribed level (whether deducted or not). The payer must pay the withholding tax to LHDN within one month of the date of payment to the non-resident. Otherwise, you risk being exposed to potential risks: if the payer does not pay the withholding tax or pays it late (not within one month from the date of payment/credit to the NR beneficiary), he will be subject to a tax increase equal to ten percent of the amount he does not pay. Interest accrued in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. However, such interest may also be taxed in the Contracting State in which it arises, if the recipient is the beneficial owner of the interest, the tax not exceeding 10% of the gross amount. Interest earned by a resident of Singapore on approved loans within the meaning of section 2(1) of the Malaysian Income Tax Act 1967 is exempt from Malaysian tax. The government of a Contracting State shall be exempt in the other Contracting State from tax on interest received by that other State. The above provisions shall not apply if the beneficial owner of the interest has an SE or a fixed base in the Contracting State in which the payer is resident and the interest paid is effectively linked to that publicly owned establishment or fixed reference.

Similarly, interest accrues in the Contracting State in which the debtor is resident, but if the debtor has a PE in the other Contracting State where the beneficial owner is resident and the interest is paid in respect of any debt related to that ETI, the interest is deemed to accrue in the other Contracting State. If, by reason of the special relationship between the payer and the beneficiary, the interest paid exceeds the amount that would otherwise have been paid, the provisions of the contract shall apply only to that amount and any excess interest shall be taxable under the laws of each Contracting State. It should be noted that in the absence of the DTA, foreigners who received interest from Malaysian residents were subject to a withholding tax of 15% and Singapore levied a withholding tax of 15% on interest paid to non-residents. As an expat living abroad, you will receive automatic renewal until June 15 after the end of the calendar year. However, you will have to pay all taxes due before April 15 to avoid penalties and interest. You can get an extension until October 15 (if you request it). There are other forms that must be submitted if you have bank or financial accounts abroad; foreign investment corporation; or own 10% or more of a foreign corporation or partnership. If you fail to complete this form or submit it late, the IRS may impose penalties of $10,000 or more per form. These penalties are payable whether or not you owe income tax. We`ve helped hundreds of expats around the world recover their previous U.S. taxes because they haven`t filed U.S. tax returns in many years.

This is indeed our specialty and we offer a 10% discount for clients who wish to file multiple tax returns at once and fully comply with the IRS. Work with a recognized expert to help you prepare your U.S. tax return. We can also offer advice and tax planning services with other expat taxes; We look forward to working with you. Interest – A 15% withholding tax applies to interest paid to non-residents that may be reduced under an applicable tax treaty. It is amazing how quickly people have turned to digital services to continue what they are doing during the recent Movement Control Order (MCO) in Malaysia or the lockdown in other countries. Whether you`re in lockdown, quarantine or MCO, you need to continue to reach your customers and support them as usual. Fortunately, this is possible in the age of high technology. Wider adoption of digital services in enterprises For example, companies in the education and training sector have quickly started offering their sessions online via video chat applications such as Skype or Zoom.