![](https://i.imgur.com/CLvY2jA.png")
28-12-2021, 08:44 AM
Dr. Voon Yuen Hoong, Tax Executive Director
08/12/2021 share
Malaysia adopts a territorial principle of taxation in that only income accruing in or derived from or received in Malaysia from outside Malaysia is subject to income tax in Malaysia pursuant to Section 3 of the Income Tax Act, 1967 (“ITA”).
Since 2004 to-date, “income received in Malaysia from outside Malaysia” or foreign sourced income (“FSI”) by Malaysian taxpayers are not taxable due to the availability of tax exemption under Paragraph 28, Schedule 6 of the ITA (“Para 28”), where exemption is given to any person, other than a resident company carrying on the business of banking, insurance or sea or air transport, in respect of income derived from sources outside Malaysia and received in Malaysia.
......
Unfortunately, the exemption under Para 28 will no longer be applicable to tax residents come 1 January 2022. The Minister of Finance has tabled in the Finance Bill 2021 that Para 28 shall be amended by removing the exemption now enjoyed by tax residents. Effectively, income tax will be imposed on resident persons in Malaysia on income derived from foreign sources and received in Malaysia with effect from 1 January 2022, and such income will be treated equally and taxable under Section 3 of the ITA vis-à-vis income accruing in or derived from Malaysia.
For the details, please refer to: https://www.crowe.com/my/insights/taxabi...ced-income
08/12/2021 share
Malaysia adopts a territorial principle of taxation in that only income accruing in or derived from or received in Malaysia from outside Malaysia is subject to income tax in Malaysia pursuant to Section 3 of the Income Tax Act, 1967 (“ITA”).
Since 2004 to-date, “income received in Malaysia from outside Malaysia” or foreign sourced income (“FSI”) by Malaysian taxpayers are not taxable due to the availability of tax exemption under Paragraph 28, Schedule 6 of the ITA (“Para 28”), where exemption is given to any person, other than a resident company carrying on the business of banking, insurance or sea or air transport, in respect of income derived from sources outside Malaysia and received in Malaysia.
......
Unfortunately, the exemption under Para 28 will no longer be applicable to tax residents come 1 January 2022. The Minister of Finance has tabled in the Finance Bill 2021 that Para 28 shall be amended by removing the exemption now enjoyed by tax residents. Effectively, income tax will be imposed on resident persons in Malaysia on income derived from foreign sources and received in Malaysia with effect from 1 January 2022, and such income will be treated equally and taxable under Section 3 of the ITA vis-à-vis income accruing in or derived from Malaysia.
For the details, please refer to: https://www.crowe.com/my/insights/taxabi...ced-income
