Good day Mr know it all.
Below is the official link from the Government of Malaysia:
https://www.mof.gov.my/portal/en/ne...eign-source-income-for-resident-taxpayers-mof
New Malaysian nomad visa
- Thread starter Mike Forman
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Below is the official link from the Government of Malaysia:
https://www.mof.gov.my/portal/en/ne...eign-source-income-for-resident-taxpayers-mof
The article does not provide any new information. In fact, all of this has already been discussed many months ago.
Do yourself a favour and read again what the Ministry of Finance explains. Than check what you claim:
There is a huge difference between foreign sourced income and "All income derived from foreign soil ... ".
I recommend you start to learn about PE. Than you will (hopefully) understand that things are not as simple as you would like them to be.
Last edited: Nov 27, 2022
They talk about real passive income, or foreign income where Key management decisions are done abroad.
If you manage your UAE company from Malaysia, it will be considered a Malaysian company from tax perspective - PE rules kicks in.
Will they enforce this? probably not, but you can't play games with malaysians, I live part of the year there, and although it's a great country, the gov changes laws on a whim and the ruling party dislike foreigners. So you need to keep that in mind
Taxwise Indonesia is not attractive. Check this thread -> New Visa to Let Tourists With $130,000 Live in Bali for 10 Years for a more detailed discussion.
Last edited: Nov 28, 2022
The did post an update to the FAQ with more detailed answer regarding taxation and different sources of income. So for example someone who is a "freelancer" (I assume having a US LLC would fall into this category) there should be no tax applied when the source of income is outside of Malaysia:
> Tax may be imposed by tax authority from country where the source of income derived from. As for Malaysia, it may not be taxable as per:
1. Source of income from outside of Malaysia (Section 3, ITA 1967)
2. Tax exemption on remittance (Para. 28 Schedule 6, ITA 1967)
3. Taxing rights by related countries (Article 14, Double Taxation Agreement)
4. Ongoing discussion by OECD on Action 1 (Digital Economy) of BEPS (Base Erosion Profit Shifting)
I'm a bit skeptical still, as I think the PE rules would kick in. But if taken for face value this looks promising.
Indeed, you better be very skeptical. PE rules will kick in. Nothing has changed.
Your hopes are based on the assumption of "Source of income from OUTSIDE Malaysia". However, if you do your job from inside MY it automatically turns into "Source of income from INSIDE Malaysia".
I urge everyone to read the relevant tax code to avoid costly mistakes.
A hint regarding pitfalls: Take the "Remote Worker (Foreign)" with Source of Income from outside MY:
- Tax not applicable if the number of day stayed in Malaysia not exceeding 60 days. Tax exemption under Para. 21 & 22, Schedule 6, ITA 1967
- Will be Taxable under Section 4(b)/ Section 13(2) if the number of stay is 61 days and more.
- Tax rate will be based on residential status under Section 7, ITA 1967. References: A you read the entire page 6 you will also find some discrepancies.
For all others there are jurisdictions like Dubai, Bahrain ... .
So spending three months in Malaysia on this visa would attract taxation at 24%?Or you need to be tax resident in Malaysia first?Or as per the above point you are considered tax resident after spending 60 days.
Different cases. Do not mix them.
For general questions -> 2022/2023 Malaysian Tax Booklet
Buyer beware: PE rules apply and might turn your foreign sourced income into local income.
How would you beat the PE rules even after staying there - I mean how many days can one stay in a country before PE rules kick in or to put it another way even without an office how does a PE rule kick in and how do we beat that?
You cannot "beat" them. PE either applies or does not apply.
Note: Countries with territorial taxation are not interesting if you run the danger of PE rules being applied. Pick a tax free country from the onset and everything is fine. For this reason we have Dubai (and many others).
Territorial countries are only useful if you have purely passive income!
Yeah but this only applies when the country is strict on PE rules.
If you have your Cedula in Paraguay and you are resident in Thailand or Malaysia and all your companies, bank accounts...etc are run through the Paraguayan address, then you should be fine.
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