Question

A payer, who pays interest to a non-resident, is required to withhold 15% of the gross interest and remit the amount withheld to Inland Revenue Board Malaysia within one month from the date of payment or crediting the amount to the nonresident.
Explain under the Income Tax Act 1967 instances whereby interest income is deemed to be derived from a Malaysian source.

Answer 1

Solution:

As per the Income Tax Act 1967 instances whereby interest income is deemed to be derived from a Malaysian source in case of a non - resident:

1. Interest received from Government of Malaysia.
2. Interest received from a resident is treated as income deemed to have accrued or arisen in malaysia in a where such interest is earned in respect of funds borrowed by the resident and used by resident for carrying on business/profession in malaysia or is in respect of funds borrowed by the resident and is used for earning income from any source in malaysia
3. Interest received from a non-resident is treated as income deemed to accrue or arise in Malasiya if such interest is in respect of funds borrowed by the non-resident for carrying on any business/profession in malaysia.