Update taxability of foreign source income

On 31st December 2022, our government has agreed to exempt taxation on foreign source income (FSI) for resident taxpayers to ensure the smooth implementation of the tax initiative, said the Ministry of Finance (MoF).

The tax exemption is effective from Jan 1, 2022 to Dec 31, 2026.

Finally the following orders has been gazetted recently :

• Income Tax (Exemption) (No. 5) Order 2022 - Exemption of FSI received by resident individuals.

• Income Tax (Exemption) (No. 6) Order 2022 - Exemption of foreign-sourced dividends received by resident companies, limited liability partnerships (LLPs) and individuals in relation to a partnership business in Malaysia.

Key Salient Points on The Order

• Exemption period 1/1/2022 to 31/12/2026 for resident individual

• All sources of income under Section 4 of ICA 1967 for resident individual on FSI received in Malaysia from outside Malaysia.

• Income arising from outside Malaysia which is bought into Malaysia.

• FSI except for dividend income that is received in Malaysia from outside Malaysia for companies and LLPs will subject to :

  • Amounts received from 1/1/2022 to 30/6/2022 – 3%

  • Amounts received after 30/6/2022 – prevailing income tax rate

Past Blog

Read our past blog posting from FSI :

1. Confusion on the exemption of foreign source income dated on 30/05/2022

https://bit.ly/3yVOooj

2. 马来西亚对海外收入征税政策 dated on 18/03/2022

https://bit.ly/3csapUe

3. Foreign source income taxable in Malaysia 2022 dated on 11/01/2022

https://bit.ly/3KL1NUx

4. (u-turn update) foreign source income budget 2022 dated on 31/12/2021

https://bit.ly/3tXbici

5. FAQ on Special Income Remittance Programme (PKPP) dated on 27/12/2021

https://bit.ly/3CFoNBq

6. Special Income Remittance Programme (PKPP) to Malaysian Residents dated on 8/12/2021

https://bit.ly/35ObF0Z

7. 预算案 2022 dated on 19/11/2021

https://bit.ly/3tYpdPz

8. Budget 2022 - SME edition dated on 18/11/2021

https://bit.ly/3tRcq1i

9. Foreign source income taxable in Malaysia dated on 10/11/2021

https://bit.ly/3w5BG6y

10. Foreign Income Remitted Into Malaysia Taxable 2022 on 2/11/2021

https://bit.ly/3tTfJVI

11. 海外收入汇回大马时将被征税 dated on 2/11/2021

https://bit.ly/3Imb8k9

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