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Foreign Sourced Income: Why now?

Introduction

After enjoying Tax Exemption on Foreign-Sourced Income for more than 20 years, the Government has decided to end this from 1 January 2022 onwards. It allows IRB to tax on foreign-sourced income.

FSi
Foreign Sourced income starts 1 Jan 2022

Why do this after 24 years?


On 5 October 2021, Malaysia was listed in European Union (EU) grey list due to our Foreign Sourced Income exemption regime. EU thinks that this exemption may encourage Tax Avoidance, Tax Fraud and Money Laundering. To avoid being added to the black-list later on by the EU, the Malaysian Government has decided to remove this Tax Exemption.

How do they know you have money overseas?


Easy! Malaysia is part of the 108 countries that are now sharing banking information. Thanks to Big Data and Data Analysis, our Malaysian Government can easily match and uncover these foreign bank accounts. Once discovered will be marked as Tax Evasion. You do not just pay the additional tax but are also slapped with a heavy penalty of 100%.

Only have the “Precious 6 Months” to take action


The transition period is six months. Have foreign-sourced income overseas? After this Tax Seminar, you will know the factors to consider, the plan, and strategise the best timing to bring the foreign fund back into Malaysia. You will also learn how to avoid penalties by getting the correct documentation.

Further complicating the matter : selective exemption for individual and dividend


The foreign-sourced income has become more complicated with exemption given to all foreign income received by individuals and also for dividend income received from the overseas companies until 2026. This doesn’t come as a blanket exemption, there are condition given and it is published in the guideline by government


This follows a typical cycle where more pockets of exemption may be given here and there with condition attached, this will complicate the matter. While at the same time it does call for celebration for the amount of tax saved. These conditions will be studied in this seminar.


Are you making this mistake too?


Malaysian derived or deemed derived has long been misconceived as Foreign Sourced Income.

This misunderstanding resulted in revenue wrongly parked overseas, Incorrect Returns with Tax Undercharged. Have a clear understanding of this and know the correct approach moving forward.


Very rare opportunity: With just 3% tax. How to do it?


Malaysian Government provides a concession income tax rate of 3% on Foreign Sourced Income received in Malaysia from 1.1.2022 to 30.6.2022.


Seriously! IRB not going to question?


Especially since the Government committed that “there will be No Tax Audit, No Enquiry and No Investigation on the foreign sum received in Malaysia during 1.1.2022 to 30.6.2022.”  



This transition period is a Golden Opportunity for those with funds “wrongly or accidentally” diverted into an overseas bank. Know the catch and decide with peace of mind.  

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There is a lot of confusion lately regarded FSI. To separate the truth from fiction, read this article: “You See FSI Not a Real U-Turn“.

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