Episode Details

Malaysia: Foreign Income Exemptions for Resident Individuals

Generally, resident individuals in Malaysia may be exempt from Malaysian income tax on foreign-sourced income received in Malaysia, provided the relevant exemption conditions are satisfied.

The exemption broadly covers all classes of foreign-sourced income, except income from a partnership business in Malaysia.

A key condition is that the foreign income must generally have been subjected to tax in the country from which it is derived.

The current exemption is available from 1 January 2022 through 31 December 2036, subject to the applicable conditions.

Key takeaway: For Malaysian resident individuals, foreign-sourced income is not automatically taxable simply because it is received in Malaysia. The type of income, whether foreign tax was paid, and the applicable exemption conditions must be considered.