Move to tax foreign-sourced income in Malaysia not a surprise

Certain types of such income should continue to be exempt from taxation in the country, says Deloitte in a report

Published Sat, Nov 20, 2021 · 05:50 AM

Kuala Lumpur

THE Malaysian government's move to remove the exemption of tax from foreign-sourced income (FSI) is likely in response to the country's inclusion in the European Union's (EU) grey list, where Malaysia's territorial sourced tax regime is considered harmful, analysts said.

The tax proposal is not surprising, said accounting firm Deloitte Malaysia in a report, as the EU is concerned only where such regimes create situations of double non-taxation.

"Income such as dividends would not be a concern as it would not rank for a deduction. That being said, the Finance Bill 2021 seems to cover all kinds of FSI, including foreign divide…