Episode Details

Are Foreign-Sourced Dividends Taxable for Malaysian Companies?

Generally, they may be taxable, but a temporary exemption applies subject to conditions.

Malaysian resident companies and limited liability partnerships (LLPs) can benefit from an exemption on foreign-sourced dividend income received in Malaysia from 1 January 2022 to 31 December 2026, provided the relevant conditions are satisfied.

Key conditions include:

• The dividend has been subject to tax in the foreign jurisdiction; and
• The headline/maximum corporate income tax rate in that jurisdiction is at least 15%.

Key takeaway: Foreign-sourced dividends received by Malaysian companies are not automatically exempt. The foreign tax paid and the applicable foreign jurisdiction’s tax rate must be considered to determine whether the exemption applies.