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RESIDENCE STATUS - Coggle Diagram
RESIDENCE STATUS
TAX RESIDENCE OF INDIVIDUALS
Section 7(1)(a) - 182 days or more
Section 7(1)(c) - 90 days or more and for any three out of the four immediately preceding years
he had been a tax resident
he was present in Malaysia for a total period of 90 days or more
Section 7(1)(d) - Unusual rule
the individual had been a tax resident in Malaysia for three immediate preceding years and is also a tax resident in the following year
Tax Resident & Malaysian citizen
two different concepts
Practical purpose
Section 7(1B) - government servants
deemed to be tax resident by reason of either
having or exercising their employment outside Malaysia
attending any course of study in any institution or professional body outside Malaysia that is fully-sponsored by the employer
individuals who have migrated and apply for employment with a Malaysian government agency abroad, section 7(1B) does not apply
Tax resident vs non-resident (comparison)
Section 7(1)(b) - Fewer than 182 days
temporary absence
connected w their service in Malaysia and owing to service matters or attending conferences or seminars or study abroad
owing to ill-health involving themselves or a member of their immediate family (spouse, children and parents)
In respect of social visits not exceeding 14 days in aggregate (include any form of vacation outside Malaysia besides a vacation to a home country)
TAX RESIDENCE FOR COMPANIES
management and control
the place where the directors meet for decision making
branch & subsidiary
local subsidiary normally treated as tax resident
local branch generally treated as non-resident in Malaysia unless its management and control of its affairs is exercised in Malaysia
dual residence
change of residence status
case law
a company may be a resident in one year, and non-resident in another year
statute law
In Malaysia, once a company is established to be tax resident for a basis year for a YA, it shall be deemed to be tax resident for the subsequent basis year
importance of residence status of companies
scope of charge
charged to tax at either 17% or 24% or both rates, depending on the paid up ordinary capital on the 1st day of the basis period and gross income for YA
distribution of dividends
any dividends paid or distributed on or after the day on which the control & management was first exercised in Malaysia are deemed to be derived from Malaysia
specialised business
specialised business such as banking, insurance, sea & air transport will be assessed on a worldscope basis
investment incentives
tax incentives given to a resident company incorporated in Malaysia
withholding taxes
applicable in respect of interest, royalty, public entertainers, contract payments, technical fees and Section 4(f) income paid or credited to NR persons (including companies)
TEST OF RESIDENCE STATUS OF A PERSON
Companies: deciding factor is where the management and control are exercised
Individuals: various tests (four rules) - uses the number of days the individual present in Malaysia
