1. Lower Withholding Tax Rates
Payments of dividends, interest, royalties and technical fees by a Cambodian company to a Malaysian company are subject to Cambodian withholding taxes at the rate of 14% of the gross payment, based on Cambodian tax law.
With CAMMAL DTA in force:
This DTA treatment will give a significant saving of Cambodian withholding taxes of 29% [(14-10)/14 = 29%] for Malaysian investors when they repatriate profits back from Cambodia to Malaysia. Malaysian investors can do their own calculations as to which route is best to repatriate profits e.g. dividends, interest, royalties and/or technical fees.
For some investors, the routes are limited. Although the tax exposure in Cambodia is reduced, the said profits repatriated to Malaysia may be taxable in Malaysia. The exposure to taxation in Malaysia is generally as follows:
If any of the above income is subject to Malaysian income tax, the Cambodian withholding tax paid will be allowed to set off against the Malaysian income tax as a double taxation relief against the Malaysian tax payable. The amount of setoff will be limited to the Malaysian income tax suffered on the said income. Due to the intricacies of the computation of double tax relief in Malaysia, Malaysian investors may not get the full relief for the Cambodian withholding tax deducted in certain circumstances.
Stay Up-to-date with Our Newsletter