Malaysia: FAQs on special program for foreign income remittance

FAQs were released by the Malaysian Inland Revenue Board on a special program for foreign income remittance

FAQs on a special program for foreign income remittance

The Malaysian Inland Revenue Board on 17 December 2021, released a set of “frequently asked questions” (FAQs)—currently available only in the Malay language—on a special program for foreign income remittance.

The special program—introduced following the repeal of the tax exemption for foreign-sourced income received in Malaysia from 1 January 2022—provides a tax rate of 3% with regard to the gross amount remitted into Malaysia by any resident person from 1 January 2022 through 30 June 2022.  It applies for all types of taxable foreign-source income maintained abroad, including unreported Malaysian source income for the year of assessment (YA) 2020 and prior YAs.  Capital gains are not eligible for this special program.

The FAQs explain, in part, that:

  • Income from outside Malaysia is considered “received in” Malaysia when it is remitted, brought or transferred into Malaysia physically or through the banking system.
  • A declaration of the income remittance can be made electronically (online) using a form prepared by the Malaysian Inland Revenue Board starting 1 January 2022.  The declaration must be made on or before 30 July 2022.
  • Bilateral or unilateral relief is available where the same income is subjected to both Malaysian and foreign tax.

The declaration under the special program will be accepted in good faith by the tax administration without any tax audit or investigation.

Once the special program expires, the Malaysian Inland Revenue Board will scrutinise information on funds kept overseas by Malaysian residents under an exchange of information agreement with foreign countries. When taxpayers are found to be underreporting their Malaysian sourced income that is kept overseas, additional assessments and penalties could be assessed by the Malaysian Inland Revenue Board.

Read a December 2021 report prepared by the KPMG member firm in Malaysia

 

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