Profit repatriation: Transferring money out of Malaysia.

Profit repatriation: Transferring money out of Malaysia

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:

Albania

France

Mongolia

South Korea

Argentina

Germany

Morocco

Spain

Australia

Hong Kong

Myanmar

Slovak Republic

Austria

Hungary

Namibia

Sri Lanka

Bahrain

India

Netherlands

Sudan

Bangladesh

Indonesia

New Zealand

Sweden

Belgium

Iran

Norway

Switzerland

Bosnia Herzegovina

Ireland

Pakistan

Syria

Brunei

Italy

Papua New Guinea

Thailand

Cambodia

Japan

Philippines

Turkey

Canada

Jordan

Poland

Turkmenistan

Chile

Kazakhstan

Qatar

UAE

China

Kuwait

Romania

United Kingdom

Croatia

Kyrgyz

Russia

United States of America

Czech Republic

Laos

San Marino

Uzbekistan

Denmark

Lebanon

Saudi Arabia

Venezuela

Egypt

Luxembourg

Seychelles

Vietnam

Fiji

Malta

Singapore

Zimbabwe

Finland

Mauritius

South Africa

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Withholding tax

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.

Dividends

Malaysia does not impose withholding tax on dividends.

Interest

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

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.

Conclusion

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. 

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