Highlights on Budget 2022 Proposals (Part 3) - MOF's Media Release on Foreign-Sourced Income and Remission of Stamp Duty on Contract Notes for Trading of Shares Listed on Bursa Malaysia

In the recent announcement of the Budget 2022, it was proposed that effective 1^st January 2022, income of a person who is a resident in Malaysia arising from sources outside Malaysia and received in Malaysia will no longer be exempted from tax. Based on the relevant amendments in the Finance Act 2021, the aforesaid foreign-sourced income received by the residents in Malaysia will be taxed as follows:-

The Inland Revenue Board ["IRB"] has thereafter released a media announcement on the Special Programme for Remittance of Foreign Income Kept Overseas to encourage residents in Malaysia to participate in this Special Programme and voluntarily declare such income remitted to Malaysia during the period from 1^st January 2022 to 30^th June 2022 that will be subject to the special tax rate of 3% on gross amount without being subject to tax audit. It was stated that further details will be provided in the Frequently Asked Questions / guidelines to be issued later on.

Following the feedbacks received and further consultations with various parties on the above withdrawal of tax exemption on foreign-sourced income received in Malaysia by tax residents in Malaysia proposed in the Budget 2022, the Ministry of Finance ["MOF"] has on 30^th December 2021, through a media announcement, agreed to extend the exemption of the foreign-sourced income received by the tax residents as below-

The above exemption will be given for the period from 1^st January 2022 until 31^st December 2026 and subject to certain conditions to be provided by the IRB later. Foreign-sourced income other than the above will be subject to tax in Malaysia from 1^st January 2022 onwards.

For the category of individual taxpayers, the exemption is granted to all individuals except for those carrying on partnership business in Malaysia. For non-residents (individuals, companies and others), they will still be eligible for the tax exemption on foreign-sourced income received by them in Malaysia.

At the same time, the MOF has also announced that the foreign-sourced income received in Malaysia will be exempted from the imposition of the one-off special tax - Cukai Makmur for the year of assessment 2022 which is chargeable on companies (other than Small and Medium Enterprise) generating high income during the COVID-19 pandemic period where the chargeable income in excess of RM100 million will be taxed at 33%.

In the Budget 2022, it was proposed that the stamp duty be increased from 0.10% to 0.15% i.e. RM1.00 to RM1.50 for every RM1,000 (or fractional part) of the transaction value of securities and the stamp duty limit of RM200 for each contract note be abolished.

Taking into consideration the feedbacks received from various parties, the Government has now announced that the maximum stamp duty to be imposed on each contract note will be capped at RM1,000 while the stamp duty rate of 0.15% will remain as proposed. The amount of stamp duty in excess of RM1,000 will be remitted and this is applicable to all contract notes for the period from 1^st January 2022 to 31^st December 2026 for shares traded on Bursa Malaysia.