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Cambodia Malaysia Double Tax Agreement (DTA)

How Malaysian investors can benefit 

Bright Sky
Malaysia entered into a double tax agreement (DTA) with Cambodia (CAMMAL DTA) which came into force on 1 January 2021. 

With this DTA, Malaysian business owners will need to pay less Cambodian withholding taxes when repatriating their profits to Malaysia, in addition to enjoying other taxation benefits. Have a read of the commentary below and see how you can benefit. For the sake of easy reading, this article has simplified some of the technical terms in the DTA.

 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:

With the coming into force of the CAMMAL DTA, the withholding tax rates on dividends, interest, royalties and technical fees will be reduced to 10%.
Technical fees are defined as fees for services of a technical, managerial or consultancy nature but exclude fees for independent personal services (i.e. services carried out by an individual as an independent professional as opposed to services carried out on behalf of his employer). This definition should cover payments for architect fees, engineering fees, accounting fees and legal fees charged by Malaysian businesses. However, fees which are not for services of a technical, managerial or consultancy nature (e.g. administrative charges) will not enjoy this favourable withholding tax rate. 

Cambodia Malaysia Double Tax Agreement (DTA)


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:

  • Dividends – not taxable in Malaysia.
  • Interest income – not taxable in Malaysia if the interest was paid in respect of a loan used in Cambodia.
  • Royalties – may not be taxable in Malaysia if certain conditions are met.
  • Technical fees – taxable in Malaysia if the technical fees are considered to be sourced from Malaysia.

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.  


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