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Unlocking the Impact of Finance (No 2) Bill 2023: A Crucial Amendment in Foreign Tax Definition

The Finance (No 2) Bill 2023 has been officially unveiled, comprising a comprehensive 231 pages that delve into pivotal amendments in various aspects of taxation.

Among the notable changes lies a modification to Section 2 of the Income Tax Act 1967, specifically altering the definition of "Foreign Tax."

Key Amendment: Redefining "Foreign Tax"

The proposed alteration emphasises that foreign tax should be identified based on the territory where the income arises.

As businesses, this amendment necessitates a strategic and meticulous approach to handling international income and tax calculations.

Considerations for Businesses:

1) Specificity of Income Sources:

Businesses must meticulously identify and attribute income to the precise foreign territory where it is generated. This precision is foundational for calculating the applicable "foreign tax" under the revised definition.

2) Review of Tax Jurisdiction Rules:

Companies operating across multiple foreign territories should comprehensively review the tax jurisdiction rules in each country.

Understanding how income is taxed in these jurisdictions is imperative for aligning tax calculations with the proposed amendment.

3) Documentation and Record-Keeping:

Thorough documentation and record-keeping practices are non-negotiable.

Businesses need to maintain detailed records related to income generation in foreign territories, encompassing transaction specifics, revenue sources, and associated taxes paid.

4) Consultation with Tax Professionals:

Given the intricacies of international tax matters, businesses are strongly advised to engage with tax professionals specialising in cross-border taxation.

Their expertise will guide businesses in interpreting and applying the amended definition to their specific scenarios.

5) Impact on Tax Liabilities:

An assessment of how the proposed amendment may influence overall tax liabilities in Malaysia is crucial.

The clarification that foreign tax pertains to the territory where income arises can potentially impact the calculation of foreign tax credits or exemptions.

6) Stay Informed on Changes:

Tax laws are dynamic and subject to updates and changes. Staying informed about additional guidance or alterations related to the amended definition is essential. Regularly checking for updates from tax authorities is recommended.

Essentially, the focus is aligning tax calculations with the specific foreign territory where income is generated.

Proper documentation, a profound understanding of local tax laws, and seeking professional advice are indispensable for businesses navigating these changes effectively.

解读《2023 年财政(第 2 号)法案》的影响: 外国税收定义的重要修订

马来西亚《2023 年财政(第 2 号)法案》已正式公布,该法案长达 231 页,涉及税收各方面的重要修正案。

其中值得注意的修改包括对 《1967 年所得税法》第 2 条的修改,特别是对 "外国税 "定义的修改。

关键修正案: 重新定义 "外国税



1) 收入来源的具体性:

企业必须一丝不苟地确定收入并将其准确归属于产生收入的外国地区。这种精确性是根据修订后的定义计算适用的 "外国税 "的基础。

2) 审查税收管辖权规则:


3) 文件和记录保存:


4) 咨询税务专业人士:


5) 对税负的影响:


6) 随时了解变化:




Finance (No. 2) Bill 2023: Amendment of section 2 -

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