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 non-resident.
Explain under the Income Tax Act 1967 instances whereby interest income is deemed to be derived from a Malaysian source.

Answer 1

Instances where interest is derived from Malaysian source

1. Interest paid on a fixed deposit held in Malaysian ringgits at a Malaysian commercial bank.

2. Interest accrued on a savings account maintained in a Malaysian commercial bank.

3. Coupon payments on a bond that is purchased in Malaysia - This can be a corporate bond or a Malaysian treasury bond.

4. Rental income from a property that is located in the territory of Malaysia.

5. Profits generated by a business having its operations in Malaysia.

6. Dividends that are paid on shares of stocks that are listed on the Malaysian Stock exchange.

7. Interest derived in Malaysia based on the estate of a deceased Malaysian national.