Episode Details

How Did Malaysia’s Foreign Income Tax Rules Change in 2022?

Before 1 January 2022, Malaysia generally provided a broad exemption for foreign-sourced income received in Malaysia.

From 1 January 2022, that blanket exemption was removed. As a result, foreign-sourced income received in Malaysia by a Malaysian tax resident generally became subject to Malaysian income tax, subject to specific exemptions and transitional measures introduced subsequently.

Key takeaway: The 2022 reform marked a significant shift from Malaysia’s previous broad exemption approach toward a taxation-on-receipt/remittance framework, although subsequent exemptions mean the current treatment depends on the type of income and taxpayer.