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UAE-Malaysia Double Tax Treaty

UAE-Malaysia Double Tax Treaty

The United Arab Emirates signed the first double taxation agreement with Malaysia in 1995. The agreement was enforced a year later and provided for its renewal every five years. The double taxation agreement between the UAE and Malaysia aims to promote and strengthen economic relations between the two countries. The treaty also contains a protocol with respect to the prevention of fiscal evasion. The UAE-Malaysia double tax treaty covers the following taxes:

  • the income, the development and the petrol income taxes in Malaysia,
  • the income and the corporate taxes in the UAE.

Additionally, the agreement will also cover any similar taxes imposed in any of the states. Tax authorities of both countries have the obligation to notify each other in due time about any changes brought to their taxation systems that could affect the agreement.

Incomes covered by the UAE-Malaysia double tax treaty

The double taxation agreement between the UAE and Malaysia covers the income or elements of incomes derived by Malaysian and UAE citizens and companies in the other state. The following incomes are included in the agreement:

  • incomes derived from immovable property that can be taxed in any of the two contracting states,
  • business profits from Malaysian or UAE companies or permanent establishments that can only be taxed in the country where the business activities are carried out,
  • income derived from shipping and air transport activities that will be taxed in the country where the operator is registered in,
  • dividends, interests and royalties,
  • incomes derived personal services,
  • technical and manager fees,
  • incomes derived from the alienation of property.

Our company registration agents in Dubai can provide you with more information related to the incomes covered by the double taxation treaty with Malaysia.

Reduced tax rates under the UAE-Malaysia double tax agreement

The UAE-Malaysia double taxation agreement provides for the following reduced tax rates:

  • a 10% tax rate on dividends of the dividends are paid by a UAE company to a Malaysian company,
  • a 0% tax rate on dividends if the company paying them is Malaysian and the recipient is a UAE resident,
  • a maximum 5% tax rate on interest payments,
  • a maximum 10% tax rate on royalties.

For information about the avoidance of double taxation under the UAE-Malaysia agreement, you can contact our Dubai agents in company formation.