The meeting takes place in an undisclosed, luxurious, but bustling hotel lobby in
Kuala Lumpur.
Head Tax Native (“TN”):
Secret Private Client Adviser in Malaysia, your mission, should you choose to accept it, is to educate us on the practical tax considerations in Malaysia.
This task requires a delicate balance of expertise and discretion.
Be warned, should your real identity be revealed during this covert operation, you will be disavowed by Tax Natives and shunned by your fellow private client advisers.
Do you accept?
Secret Private Client Adviser in Malaysia (Secret Adviser):
I accept.
Tax Natives:
[sits comfortably in a bustling hotel lobby, opens a notebook] Let's look at some of the tax considerations for private clients in Malaysia.
How does one become a tax resident there?
Secret Adviser:
[leans forward, adjusts glasses] It's quite straightforward under the Income Tax Act.
Since 2004, Malaysia's taxation is based on territoriality, not residency.
Essentially, if you derive income from Malaysia, you're taxable, irrespective of your residency status.
Receptionist:
[argues with a guest in the background] "No, sir, the breakfast buffet doesn't include unlimited lobster!"
Tax Natives:
[smiles, then refocuses] What about personal tax rates for residents?
Secret Adviser:
[glances at a chart in a folder] For residents, the tax rates are graduated.
For instance, the first 5,000 ringgit is taxed at 0%, and it scales up to 30% for amounts exceeding 2 million ringgit.
Non-residents, on the other hand, are taxed at a flat 30% rate on their Malaysian income, regardless of the amount.
Cleaner:
[approaches, vacuum in tow] Sorry to disturb, could you lift your feet? [They comply as the diligent cleaner vacuums under the table]
Tax Natives:
[chuckles, then continues] I guess Corporate tax seems crucial too. Can you elaborate on that?
Secret Adviser:
Certainly. A company managed and controlled in Malaysia is deemed tax resident.
The general tax rate is 24%, but it's reduced to 17% on the first 600,000 ringgit for smaller companies.
[Bellhop walks by, accidentally drops a stack of towels, causing a small commotion.]
Tax Natives:
[helps pick up towels] What a lively place! Now, what about the taxation of gifts and inheritances?
Secret Adviser:
[nods approvingly] Gifts are usually not taxed.
However, if the gift is in the form of real property, it's subject to stamp duty. As for inheritance, Malaysia scrapped the inheritance tax in 1991.
Tourist:
[returns, still lost] Is the museum this way?
Secret Adviser:
[corrects them with a smile] It's the other way. And regarding capital gains...
Tax Natives:
[glances at the clock] I see we're running short on time. Your insights have been invaluable. Shall we continue this over lunch?
Secret Adviser:
[stands, extends a hand] That would be great. Let's discuss over some Malaysian cuisine!
Cleaner:
[over the noise of the vacuum] Enjoy your meal!
[They leave the lobby, weaving through the lively chaos of tourists, staff, and the ever-busy cleaner.]
Tapping out
If you have any queries about this top secret interview on private client tax in Malaysia or Malaysian tax matters in general, then
please get in touch