Tax on foreign sourced income a significant change – Deloitte Malaysia

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BUDGET 2022 expects an increase in tax collection by 5.9% on the back of a better economic outlook. Corporate tax collection is expected to increase by 8.1% to RM65.5 billion which is higher than pre-pandemic numbers in 2019. 

This is optimistic but remains challenging if businesses are still trying to bounce back from Covid-19. The introduction of the one-off tax on companies that make super profits and taxation on foreign sourced income may provide some cushioning, but I also expect tax audits to be intensified to meet the collection target.

From a tax reform perspective, the taxation on foreign sourced income is a significant change and will increase the tax bill of companies with overseas operations.

More details should be provided in the finance bill in this regard and I hope that there are special circumstances available for companies to continue to enjoy exemption on such income.

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