Removal of foreign source income tax exemption will not discourage FDI

By BERNAMA / FILE PIX

The proposed removal of tax exemption on incomes derived from foreign sources as announced under Budget 2022 should not be taken as a negative move that could discourage foreign direct investments (FDI), said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.

He said as an open market economy, the attractiveness of the investment ecosystem is not only determined by the incentives, but it also depends on the comprehensiveness of the country’s tax system in accordance with the international tax standards.

The finance minister said this will ensure that the right parties are taxed, as well as a fair distribution to the jurisdictions,

He added that this will also put a stop to tax evasion and tax avoidance.

“We are sending out the message that we do not condone such practices,” he said at the virtual Invest Malaysia 2021 Series 2 today.

Tengku Zafrul pointed out that other countries such as Hong Kong and Singapore had either removed or amended their laws in order to meet the international standards.

Under Budget 2022, the government has proposed to impose income tax on incomes derived from foreign sources and received in Malaysia starting Jan 1, 2022.