Earnings stripping rules
Malaysia has introduced earnings stripping rules which apply from 1 July 2019. See the Group taxation section for more details.
The tax authorities have issued a new Guidelines on Taxation of Electronic Commerce Transactions dated 13 May 2019. The new guideline seeks to provide guidance on the tax treatment of e-commerce transactions, including the common e-commerce business models in existence. The guideline covers the scope of tax liability for e-commerce business income and e-commerce transactions that would be regarded as technical services or royalty.
Withholding tax (WHT) on software for personal use
With effect from 1 March 2019, WHT is exempted on payments made to non-residents in relation to software purchased for personal use. This exemption applies to shrink-wrapped software, site-licences, downloadable software, and software bundled with personal computer hardware, smartphones, or tablets.
Revocation of WHT exemption for payments from MSC Malaysia companies
The WHT exemption provided to non-resident companies for income received from MSC Malaysia companies has been revoked with effect from 1 January 2020. , Therefore with effect from the same date, the following income received by non-residents from MSC Malaysia companies will be subject to WHT:
- fee for technical advice or technical services,
- licensing fee in relation to technology development, and
- interest on loans for technology development.