KUALA LUMPUR, Dec 31 — The government’s agreement to exempt dividend incomes earned by limited liability companies and partnerships will enhance investment by encouraging foreign-sourced dividend incomes to be remitted into Malaysia, said Chartered Tax Institute of Malaysia (CTIM).
In a statement today, CTIM president Farah Rosley said the move would also help maintain the attractiveness of Malaysia as a location for regional offices.
“The government’s agreement to exempt dividend incomes earned by limited liability companies and partnerships is welcomed,” she said.
The Ministry of Finance (MOF) yesterday announced that the government has agreed to exempt foreign sourced income (FSI) of individual resident taxpayers from being taxed. This exemption is also extended to foreign-sourced dividend incomes earned by limited liability companies and partnerships.
The FSI tax exemption would be effective from January 1, 2022 until December 31, 2026 for a period of five years, MOF said.
According to Farah, the MOF also announced that FSI received in the year of assessment 2022 is also exempted from tax calculation for the purpose of Prosperity Tax.
She noted that the FSI exemption will be given to all individuals, except those in a partnership business in Malaysia, while for non-resident taxpayers — individuals, companies, and others — they remained exempted from income tax under Paragraph 28, Schedule 6 of the Income Tax Act,1967.
She highlighted that during the tabling of Budget 2022 on October 29, there was a proposal to withdraw tax exemption on FSI received in Malaysia, and that FSI will be taxed from January 1, 2022.
“This caused a stir among companies and individuals, especially those with significant investments overseas.
“Many Malaysian resident taxpayers were earlier caught in a dilemma on the prospect of their hard-earned income from overseas being taxed come January 1, 2022. They can now heave a big sigh of relief for at least the next five years,” she added.
— Bernama
