Double Tax Treaty Malaysia – Italy

Updated on Friday 24th August 2018

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The government of Malaysia has signed a treaty for the avoidance of double taxation with Italy and thus, Italian investors developing business activities in this country can obtain relevant tax deductions as prescribed by the regulations of the agreement. The double taxation agreement (DTA) is applicable to both natural persons and legal entities of Malaysia and Italy and it takes into consideration a set of taxes that are mentioned below. Our team of consultants in company formation in Malaysia can assist with advice on the tax benefits deriving from this legal document. 
 

Which are the main taxes covered by the Malaysia – Italy DTA? 
 

The scope of the treaty is given by a set of taxes that are covered under the Article 2 of the agreement; as mentioned in the document, Italy applies the personal income tax and the corporate income tax, while Malaysia applies the following types of taxes: the income tax and the excess profit tax, the supplementary income taxes (represented by tin profits tax, development tax and timber profits tax) and the petroleum income tax
 
As mentioned earlier, the document is applicable to any citizen of a contracting state who obtains taxable income in the other contracting state, but it also takes into consideration any legal entity, partnership or association as stated under the Article 3 (i). Our team of specialists in company registration in Malaysia can offer more details on this matter. 
 

The taxation of business income under the Malaysia – Italy DTA 
 

Italian investors who want to open a company in Malaysia will be taxed following the provisions of the treaty, which states that the Italian companies will generally be taxed in Italy. However, such companies can also be taxed in Malaysia in specific conditions, as mentioned below: 
 
  • Italian companies obtaining business income in Malaysia through a permanent establishment (a branch, office etc.) will be taxed in Malaysia;
  • the taxation of a permanent establishment in Malaysia refers only to the income obtained through economic activities developed in this country and does not refer to the company’s overall gains;
  • the taxation of the profits obtained through a permanent establishment takes into consideration deduction expenses, which also include executive and administrative expenses;
  • the taxation system applicable to a permanent establishment will use the same method in each year of financial activity
     
Businessmen are invited to contact our team of agents in company registration in Malaysia for other details related to this agreement; our representatives can offer advice on the taxation of dividends, interest, royalties and capital gains. Investors can also receive consultancy services regarding the taxation system available in this country.