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Technical Guidelines on Tax Treatment in relation to Income which is received from Abroad

Updated: Feb 20

According to the Finance Act 2021, the income tax exemption on foreign-sourced income (FSI) received by any person (other than a resident company carrying on the business of banking, insurance, or sea or air transport) will be removed for all Malaysian-resident taxpayers beginning on January 1, 2022.

As a result of this:

  • A flat income tax rate of 3% applies to the gross amount of FSI received in Malaysia between 1 January 2022 and 30 June 2022.

  • Starting from 1 July 2022, the prevailing tax rate of the taxpayer applies to FSI received in Malaysia by Malaysian residents.

Exemption Orders Certain types of foreign-sourced income (FSI) for resident taxpayers will remain tax-exempt, as provided for in the following Orders gazetted on 19 July 2022, :