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Labuan: Domestic Corporate Taxation

Scope of Income Tax

A company, regardless of its place of incorporation, is a tax resident if it is at any time during a tax year managed and controlled in Malaysia. Generally, a company is deemed to be managed and controlled in the place where its directors' meetings are held. Malaysian residents are taxed on Malayasian-source income and on foreign income remitted to Malaysia, ie it is a territorial basis of taxation. For nonresidents, only Malaysian-source income is taxable.

Income taxable in Malaysia includes:

  • gains and profits from employment;
  • gains and profits from trade, profession and business;
  • dividends, interest or discounts;
  • rents, royalties or premiums;
  • pensions, annuities or other periodic payments; and
  • other gains or profits of an income which nature is not mentioned above.

Income from the exploration and discovery of petroleum is subject to 38% petroleum income tax instead of regular income tax.

Malaysia generally does not tax foreign-source income; thus no foreign tax relief is available. However, banking, insurance, shipping and air transport are taxed on their world-wide income, and they may claim foreign tax credits.



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