The Russian Federation and Malaysia have signed an Agreement for the avoidance of double taxation and the Prevention of Tax Evasion with respect to Income Taxes. It is assumed that the document will enter into force on January 1, 2025.
The Agreement was based on standard approaches to international tax treaties with foreign countries, which Russia adheres to at the present stage.
Thus, the withholding tax rate on income in the form of dividends is set at 10% (with participation in the capital in a share of more than 25%) and 15% in other cases. The interest tax rate will be 10%.
The ratification of the agreement should take place before the end of this year so that the new provisions of the document can enter into force next year. Please note that the Double tax agreements (DTA) of 1987 is currently in force between Russia and Malaysia. The new DTA changes a number of key provisions and, mainly, reduces the rates of a number of mandatory payments by 5%.
We remind you that the presence of a seat allows:
apply preferential tax rates in terms of mandatory payments (for example, income tax, income from sources in the Russian Federation, interest, property tax, and so on);
resolve issues of conflict residency (situations in which two parties to an agreement recognize a person as their taxpayer);
offset the tax paid in one State against the tax payable in another.
For questions about the application of the provisions of the DTA and compliance with the requirements of tax legislation, including at the international level, please contact Acsour specialists.