The Income Tax (Exemption) (No. 9) Order 2017 (Exemption Order) was published in the Federal Gazette on 24 October 2017. The Exemption Order excludes non-residents from payment of income tax in respect of certain categories of income derived from Malaysia under certain circumstances. It also states that withholding tax obligations under Section 109B of the Malaysian Income Tax Act 1967 (Act) will not be applicable to the exempted income.
The Exemption Order comes into force on September 6, 2017. From a time perspective, this means that Malaysian payers will not be required to deduct and remit the withholding tax in respect of any Fees paid or credited to non-resident service providers from 6 September 2017 and next.
However, the Exemption Order does not apply to the period from 17 January 2017 to 5 September 2017, and, consequently, the provisions on taxation withholding under Article 109B will continue to apply during that period, even if the services were performed outside Malaysia (subject to any exemption is in accordance with the applicable double tax agreement).
