Q&A on tax (VAT & CIT) regulations for Foreign Company with Non-Resident status in Malaysia

Email: kul4ww@evershinecpa.com
or
Contact us by WeChat or Skype in the day-work-time of Malaysia  (GMT+8)
The Engaging Manager from Headquarter
Vivian Yee, ACCA, C.A. (M)
Skype ID: vivianyeeql;Wechat ID: vivianyeeql

NR-MY-110:
Can a foreign company with Non-Resident status apply for a VAT number in Malaysia? If can, is it necessary to pay for the corporate income tax?
Official website? Application form?
Answer:
According to BNA VAT Navigator 9.2 and 10.1.
Malaysia’s primary indirect taxes are Sales and Service Tax (SST).
No, non-residents without a business presence in Malaysia cannot register for SST.
To register for SST, a foreign company must have a business presence in Malaysia, such as a branch office, representative office, or subsidiary.
Only the foreign service providers who are liable to be registered in connection with their supplies of digital services must apply for registration using form DST-01.
Register online at https://sst01.customs.gov.my/account/register-license/1.

NR-MY-120:
If the foreign entity with Non-Resident status appoints an agent to applied for a VAT number in Malaysia:
What is the official name of the agent?
What qualifications does the agent need?
Is the agent jointly and severally liable to the Malaysia tax bureau?
Does the Non-Resident Entity need to pay for corporate income tax?
Official website?
Answer:
According to BNA VAT Navigator 9.2 and 10.4 and BNA Country Guide 2.2.2.
https://www.hasil.gov.my/en/tax-agent/appointment-of-tax-agent-by-taxpayer/
The official name is tax agent in Malaysia.
The names of tax agents who have received the approval can be found by accessing the following link:
https://mycukai.treasury.gov.my/portal/carian-lhdn-public
The taxpayer is responsible to ensure that the tax agent appointed to manage tax affairs on his behalf is a tax agent approved by the Ministry of Finance Malaysia and still within the approval period.
Taxpayer needs to submit the letter of appointment of the tax agent and the letter of agreement for the appointment as a tax agent to the HASiL Branch.
The Malaysian SST regime does not provide for the appointment of tax representatives.
Generally, for nonresident companies, the MITA taxes income accruing in or derived from Malaysia.

NR-MY-130:
What are the circumstances that a Non-Resident Company in Malaysia will not be consider as having permanent establishment (PE) in Malaysia? And what circumstances will be considered as having PE in Malaysia?
Answer:
According to BNA Country Guide 2.2.
For more information, refer to https://phl.hasil.gov.my/pdf/pdfam/GP_21052020_2.pdf
Not deemed PE
In Malaysia, a non-resident company will not be considered as having a permanent establishment (PE) if it does not have a fixed place of business in Malaysia, and its business activities in Malaysia are conducted through certain activities that do not exceed a specified period of time.
1. The business is carried on through a dependent agent who is not an independent agent acting in the ordinary course of business, and the agent’s activities in Malaysia are limited to specified activities such as soliciting orders or delivering goods on behalf of the company, and the agent does not have and habitually exercise the authority to conclude contracts on behalf of the company.
2. It carries on business in Malaysia for a period or periods not exceeding in the aggregate 60 days in any 12-month period.
3. It operates in Malaysia under a contract for the provision of services or facilities of a preparatory or auxiliary character, such as storage or purchasing activities, and the activities carried out in Malaysia are not a core part of the company’s business.
Deemed PE
PE refers to business income that is attributable to a “place of business in Malaysia”.
A person is deemed to have a place of business in Malaysia if it:
• Carries on supervisory activities in connection with a building or work site, or a construction, installation or assembly project, where the period of such activities in Malaysia exceeds 5 months in aggregate in any 12-month period; or
• Has another person acting on its behalf who:
o Habitually concludes contracts, or habitually plays the principal role leading to the routine conclusion of contracts, without material modification;
o Habitually maintains a stock of goods or merchandise in the place of business from which it delivers goods or merchandise; or
o Regularly fills orders on the other person’s behalf.
Income derived from an e-commerce transaction is deemed to be derived in Malaysia for income tax purposes if it is associated with any activity in Malaysia, regardless of whether or not that income is received in Malaysia.
Additionally, any amounts paid in consideration for any advice given or assistance or services rendered electronically through an e-commerce transaction in connection with the management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme can be classified as special classes of income deemed to be derived from Malaysia.
Same attribution of income rules also applicable for cloud services.

NR-MY-210:
Does Malaysia have Free Trade Zone and bonded warehouse system? How do foreign businessmen use the Free Trade Zone to obtain tax concessions?  
Answer:
Refer to https://www.industrymalaysia.com/free-zone-in-malaysia/
Yes, Malaysia has both Free Industrial Zone (FIZ) / Free Commercial Zone (FCZ) and bonded warehouse systems in place to promote international trade and investment.
In the FIZ/ FCZ, foreign investors can enjoy tax incentives and other benefits, including exemption from import duties and sales taxes on goods imported into the zone.
The bonded warehouse system in Malaysia allows businesses to store their imported foods without having to pay customs duties and taxes until the goods are ready to be sold or shipped out of the country.
To obtain these concessions, foreign businessmen can set up a company within the FIZ/ FCZ or work with an existing company that is already established in the zone.
The business must then apply for the relevant licenses and permits and comply with the regulations and guidelines set by the authorities.

NR-MY-220:
Can a foreign company rent a bonded warehouse in Malaysia Free Trade Zone under the name of a foreign company?
Can a bonded warehouse held under the name of a foreign company as a holder of the import and export documents?
Or can it be held by a cargo agent?
Answer:
Refer to https://www.industrymalaysia.com/free-zone-in-malaysia/
Yes, a foreign company can rent a bonded warehouse in a Malaysia Free Trade Zone under its own name and obtain the necessary permits and licenses from the relevant authorities.
In Malaysia, foreign companies are allowed to operate within Free Trade Zones and are subject to the same rules and regulations as Malaysian companies.
Foreign company can be the holder of import and export documents in Malaysia, with the necessary licenses and permits to operate the warehouse.
A bonded warehouse can also be held by a cargo agent.

NR-MY-230:
Are there any similar roles as IOR (Importer Record in Germany), Tax Agent (Germany), Fiscal Representative (Malaysia), Registered Agent (USA Texas), ACP (Malaysia)?
How to avoid situation where the VAT cannot be deducted as input tax?
Answer:
Refer to http://gst.customs.gov.my/en/rg/siteassets/specific_guides_pdf/import.pdf
An importer is the entity or individual who is responsible for bringing goods into Malaysia.
They are responsible for paying any applicable customs duties, taxes, and fees.
In Malaysia, if you have arranged with your importer to act as the Importer of Record (IOR), you may be able to claim input tax on the invoices issued under the importer’s name, if you have met all the requirements for claiming input tax.
This is because as the IOR, you are responsible for the importation of the goods and would have paid the import tax and any other charges associated with the importation.

NR-MY-240:
What are the ways of dealing with custom duties and VAT when a foreign company sells to domestic customers in Malaysia from a warehouse in the bonded area in Malaysia?
What are the differences when paying for the CIT in Malaysia?
Answer:
Refer to http://gst.customs.gov.my/en/rg/siteassets/specific_guides_pdf/import.pdf
1. Using a local agent or distributor
They can handle customs clearance and tax compliance on behalf of the foreign company. They can import the goods into Malaysia and pay any applicable customs duties and VAT. The foreign company can then sell the goods to the local agent or distributor, who will handle the local sales and distribution.
2. Foreign company can register for SST and becoming a registered person
As a registered person, the foreign company will need to collect and remit SST on its sales to domestic customers in Malaysia.
The company will also be able to claim input tax credits on its business expenses, including any customs duties and SST paid on imported goods.
3. Using a fiscal representative
They can act as the IOR for the goods, pay any applicable customs duties and SST, and handle the local sales and distribution of the goods.

NR-MY-250:
Foreign companies rent warehouses from bonded warehouses in bonded areas in Malaysia, and then sell the items to domestic customers in Malaysia. Will this make foreign companies Non-PE into PE and need to keep accounts and pay income tax?
Answer:
Refer to https://phl.hasil.gov.my/pdf/pdfam/GP_21052020_2.pdf
Renting warehouses from bonded warehouses in bonded areas in Malaysia alone may not necessarily create a PE for a foreign company in Malaysia.
However, if the foreign company’s activities in Malaysia go beyond just renting a warehouse, such as selling goods to domestic customers in Malaysia, then it is more likely that a PE is created, and the company may be required to keep accounts and pay income tax in Malaysia in accordance with Malaysian tax laws.

NR-MY-310:
For Amazon and other e-commerce B2C, the Malaysia government stipulates that natural persons should declare customs duties and VAT when importing. How they deal with it?
Answer:  
Refer to https://aws.amazon.com/legal/awsmy/
When a customer purchases a product from an e-commerce platform like Amazon, the platform usually charges the customer the necessary customs duties and VAT at the point of purchase.
When the product arrives in Malaysia, the customs department will check the shipment and verify that the declared customs duties and VAT march the amount charged by the e-commerce platform.
If there is ant discrepancy, the customs department may require the customer to pay the difference.
On October 1, 2022, Amazon Web Services Malaysia Sdn. Bhd. (AWS Malaysia) is planned to replace Amazon Web Services, Inc. (AWS, Inc.) as a reseller of AWS cloud services for accounts located in Malaysia. AWS Malaysia will apply local Service Tax and issue invoices in local currency (ringgit, MYR) for services it sells.

Contact Us

Kuala Lumpur Evershine BPO Service Limited Corp.
E-mail: kul4ww@evershinecpa.com
or
Contact us by WeChat or Skype in the day-work-time of Malaysia  (GMT+8)
The Engaging Manager from Headquarter
Vivian Yee, ACCA, C.A. (M)
Skype ID: vivianyeeql;Wechat ID: vivianyeeql

or
For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System,
please send an email to HQ4kul@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
Email address:dalechen@evershinecpa.com
linkedin address:Dale Chen

Additional Information

Evershine CPAs Firm Headquarters
6th Floor 378 Chang Chun Rd., Taipei City, Taiwan ROC
Partner Kerry Chen,  USA Graduate School and a well-English speaker
Tel No.: +886-2-27170515 ext. 105
Mobile: +886-939357000
Email: kerrychen@evershinecpa.com
Skype: oklahomekerry

Evershine has 100% affiliates in the following cities:
Headquarter, Taipei, Xiamen, Beijing, Shanghai, Shanghai,
Shenzhen, New York, San Francisco, Houston, Phoenix Tokyo,
Seoul, Hanoi, Ho Chi Minh, Bangkok, Singapore, Kuala Lumpur,
Manila, Dubai, New Delhi, Mumbai, Dhaka, Jakarta, Frankfurt,
Paris, London, Amsterdam, Milan, Barcelona, Bucharest,
Melbourne, Sydney, Toronto, Mexico

Other cities with existent clients:
Miami, Atlanta, Oklahoma, Michigan, Seattle, Delaware;
Berlin, Stuttgart; Prague; Czech Republic; Bangalore; Surabaya;
Kaohsiung, Hong Kong, Shenzhen, Donguan, Guangzhou, Qingyuan, Yongkang, Hangzhou, Suzhou, Kunshan, Nanjing, Chongqing, Xuchang, Qingdao, Tianjin.

Evershine Potential Serviceable City (2 months preparatory period):
Evershine CPAs Firm is an IAPA member firm headquartered in London, with 300 member offices worldwide and approximately 10,000 employees.
Evershine CPAs Firm is a LEA member headquartered in Chicago, USA, it has 600 member offices worldwide and employs approximately 28,000 people.
Besides, Evershine is Taiwan local Partner of ADP Streamline ®.
(version: 2024/07)
Please send email to HQ4kul@evershinecpa.com

More City and More Services please click Sitemap