Irb Guidelines: Income Tax Exemption On Foreign-Sourced Income

Arising from the enactment of the following Orders on 19 July 2022 which was reported in our Tricor Insights 7/2022, the Inland Revenue Board (IRB) has, on 29 September 2022 issued the Guidelines on Tax Treatment for Foreign-Sourced Income (“Guidelines”):-

• Income Tax (Exemption) (No. 5) Order 2022 – Exemption of foreign-sourced income (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

The tax exemption is granted to specific types of FSI received from 1 January 2022 to 31 December 2026 (5 years).

The Guidelines cover the following:

• Tax treatment of FSI and claim for allowable expenses
• Claim for foreign tax credit (FTC)
• Conditions to qualify for tax exemption
• Declaration in tax return and supporting documentation required
• Computation of cukai makmur vis a vis FSI

Feel free to download the full version: