Malaysia and India have signed a treaty for the avoidance of double taxation in 1976. Since then, the treaty was amended several times and the latest version was concluded in May 2012, becoming applicable on 26th of December 2012. The double taxation agreement (DTA) is applicable to tax residents of both countries, who can be natural persons or legal entities. Our team of specialists in company formation in Malaysia can offer in-depth assistance on the tax regulations prescribed under the treaty.
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Taxes covered by the Malaysia – India DTA
Investors who want to open a company in Malaysia and who are tax residents of India can benefit from the provisions of the treaty, which refer to various tax deductions and exemptions applicable to specific types of taxes. The treaty takes into consideration the income tax and the petroleum income tax in the case of Malaysia, as per Article 2 of the agreement, while in India, the main tax is the income tax, which also includes the surcharge.
Taxation of immovable property in Malaysia
The DTA provides a set of regulations regarding the taxation of immovable property in Malaysia and India, which has to be concluded as stipulated under the Article 6 of the treaty. Our team of consultants in company formation in Malaysia can assist foreigners with more information on this matter, but it is important to know that the income will be taxed as follows:
- income deriving from immovable property in Malaysia obtained by an Indian tax resident will be taxed in Malaysia;
- the term immovable property is defined following the national legislation where the immovable property is located;
- the taxation of income deriving from immovable property takes into consideration the direct use, letting and any other type of usages related to the respective property;
- the term also takes into consideration the income from immovable property of an enterprise.
The DTA signed by the two countries stipulates the manner in which the contracting states will tax income obtained from business profits and investors from India are invited to contact our team of consultants in company registration in Malaysia for more details regarding this subject.