On 25 April 2012, in Kuala Lumpur, Hong Kong’s Financial Secretary, and the Malaysian Minister of Finance, signed a comprehensive double taxation agreement (DTA) between Hong Kong and Malaysia.
Under the new agreement, double taxation will be avoided in that any Malaysian tax paid by the companies will generally be allowed as credit against the tax payable in Hong Kong in respect of the income.
Hong Kong residents receiving interest from Malaysia are presently subject to Malaysian withholding tax, which is currently at 15%. Under the agreement, such withholding tax rate will be capped at 10%. The Malaysian withholding tax on royalties, currently at 10%, will be capped at 8%, and the Malaysian withholding tax on fees for technical services, currently at 10%, will be capped at 5%.
The double taxation agreement will come into force after the completion of ratification procedures on both sides.
