During the presentation of Budget 2022 in October, the Government announced proposed measures to impose tax on resident income received from abroad effective 1 January 2022.
This means that all types of FSI income received by Malaysian residents will be subject to tax. The implementation of the proposed tax treatment was finalised in the Supply Bill 2021 which was passed in the Dewan Rakyat recently.
The government with stakeholders including industry and tax practitioners jointly discussed the implementation of the initiative. Thus, to ensure the smooth implementation of this tax measure, the Government has agreed to exempt tax on income received from abroad to resident taxpayers based on the following categories and substantive conditions:
Taxpayer Category of Company or Limited Liability/Partnership will be exempted from dividend income received, eligibility details of the exemption will be released by the Income Revenue Board. As for individuals, the government has exempted all forms of revenue derived from overseas.
This exemption will be effective from 1 January 2022 to 31 December 2026. Other than the types of income mentioned above are subject to the imposition of tax in Malaysia. Apart from the category listed, all other forms of taxation will remain the same. The government provides exemption to all individual taxpayers but except those in partnership business whereas for non -resident categories (individuals, companies, etc.) will remain eligible for income tax exemption.
The Finance Ministry also informs that FSI received in the year of assessment 2022 is exempt from tax calculation for the purpose of Prosperity Tax.
