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Withholding Tax Exemption On Services Performed Overseas

Non-Malaysian residents carrying out certain services outside Malaysia will now be exempted from withholding tax on income derived from those services.

by / Published: 31 Oct 2017

Withholding Tax Exemption On Services Performed Overseas
Photo: iStock

Good news for non-Malaysian residents carrying out offshore technical and installation services outside Malaysia – income derived from those services is now exempted from withholding tax.

On 24 October 2017, the Minister of Finance II, YB Datuk Seri Johari bin Abdul Ghani, announced that a Ministerial Exemption would be given to the Withholding Tax on services performed overseas, effective 6 September 2017.

This is applicable to payments to non-residents for services under sections 4A(i) and (ii) rendered outside Malaysia, which largely refers to technical or installation services.

The following is an excerpt from the Gazette:

The Minister exempts a person not resident in Malaysia from the payment of income tax in respect of income derived from Malaysia in relation to –

  1. Services referred to in paragraph 4A(i) of the Income Tax Act 1967; or
  2. Technical advice, assistance or services referred to in paragraph 4A(ii) of the Income Tax Act 1967

Click here to see a copy of the gazette: Income Tax (Exemption) (No.9) Order 2017

A more detailed breakdown of the background on the issue can be found at the following resources:
TaXavvy
Baker McKenzie
Tax@hand


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