On 1 January 2021, the double taxation agreement between the Government of the Kingdom of Cambodia (Cambodia) and the Government of Malaysia (Malaysia) came into effect.
The double taxation agreement was officially signed in September 2019 by Cambodian minister Aun Pornmoniroth and Malaysian Minister of Foreign Affairs Saifuddin Abdullah.
However, according to Article 29 of the agreement, the double taxation agreement could not come into effect until the exchange of diplomatic notes took place, and domestic procedures in both countries were completed.
The purpose of this treaty is to afford relief double taxation with respect to taxes on income and to prevent of tax evasion and avoidance between Cambodia and Malaysia.
To benefit from and to implement the reduced withholding rate under the double taxation agreement, a taxpayer in Cambodia shall obtain the approval from the General Department of Taxation of Cambodia via administrative application.
The taxes covered in Malaysia include:
Taxes covered in Cambodia are:
This agreement shall apply to persons who are residents of one or both of the contracting states.
A resident of a contracting state is any person who, under the laws of the state, is liable to tax by reason of his domicile, residence, place of incorporation, place of management, principal place of business or any other criterion of a similar nature, and also includes that state, local authority or a statutory body thereof or, in addition for Malaysia, its political subdivision.
A permanent establishment is the fixed place of a company which the business is wholly or partly carried on.
Permanent establishment also includes:
Withholding tax rates under the agreement, applicable to eligible taxpayers, are:
For more information on how you can take advantage of the double tax agreement between Cambodia and Malaysia, please contact your Acclime specialist.