Malaysia and Russia signed a new income tax treaty on 17 May, 2024, which replaced the 1987 tax treaty between the two countries.

As of now, the main measures of this new agreement are as follows:

Scope of the taxes

The tax treaty includes Malaysian income taxes and petroleum income taxes and Russian tax on company profits, and individual income taxes.

Withholding tax rates

  • Dividends – 10%; if the beneficial owner is a company that holds at least 25% of the paying company’s capital for a continuous 365 days.
  • Exemption – A 0% exemption is granted for dividends paid to the government, central bank, or specified government-owned institutions of a Contracting State.
  • Interest – 10%.
  • Royalties – 10%.
  • Fees for managerial, technical, or consultancy services – 10%.

Capital gains

The other State may tax the following capital gains derived by a resident of one Contracting State:

  • Gains from the sale of immovable property located in the other State.
  • Profits from the sale of a movable property that is part of the business assets of a permanent establishment in the other State.
  • Profits from the sale of company shares or similar interests, if at any point during the 365 days before the sale.

Double taxation relief

Both countries will utilise the credit method to eliminate double taxation.

Entry into force and implementation

The treaty will go into force after the exchange of ratification instruments and will be applied from 1 January of the year after its entry into force.