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When remitting profits outside of Malaysia, withholding taxes are imposed on profits at rates that can be reduced by treaties signed between countries. Let’s find out more about profit repatriation in Malaysia.
Profit repatriation methods
The common methods of profit repatriation in Malaysia are through dividends, interest and royalties.
Repatriation of profits can be done without any restrictions, but withholding tax rates are applied to dividends, interest and royalties.
Double taxation agreements (DTA) that Malaysia has signed with countries can help reduce the withholding tax rates under certain conditions.
Countries that have signed a DTA with Malaysia include the following:
Papua New Guinea
United States of America
Withholding tax is an amount withheld by the party making a payment (payer) on income earned by a non-resident (payee) and paid to the Inland Revenue Board of Malaysia.
Malaysia does not impose withholding tax on dividends.
Interest paid to a non-resident is subject to a withholding tax rate of 15%, which can be reduced up to 5% under a double tax treaty.
Interest paid to a non-resident by a bank operating in Malaysia or paid on funds described as networking funds by the Central Bank is exempted from withholding tax.
Royalties paid to a non-resident are subject to a withholding tax rate of 10% and can be reduced under a double tax treaty.
Australia, Bangladesh, Canada, Finland, France, Italy, South Korea, New Zealand, Norway, Romania, Switzerland and Thailand apply a 0% withholding tax rate on approved royalty payments under certain treaty provisions.
Foreign exchange controls
The Foreign Exchange Control (FEC) is governed by the Exchange Control Act, 1953 and Bank Negara Malaysia.
Under the Act, there are no restrictions for non-residents to transfer abroad profits, returns and divestment from investments in Malaysia in all foreign currencies. Non-residents can also purchase ringgit assets such as immovable property, securities and other fixed assets.
Malaysian residents are not allowed to buy, borrow, sell or lend foreign currency, make payments in Malaysian Ringgit to a non-resident in and outside Malaysia or purchase Ringgit assets in Malaysia without permission from the BNM.
Profit repatriation methods in Malaysia are through dividends, interest and royalties and are reduced by DTAs. If you need more information about transferring money from Malaysia, feel free to contact Acclime.
Acclime is Asia’s premier tech-enabled professional services firm. We provide formation, accounting, tax, HR and advisory services, focusing on delivering high-quality outsourcing and consulting services to our local and international clients in Malaysia and beyond.