Malaysia and France signed a treaty for the avoidance of double taxation, which is applicable to tax residents of both contracting states, as per Article 1 of the agreement. In this case, French investors who want to open a company in Malaysia are entitled to benefit from the provisions of the treaty, which takes into consideration specific taxes.
Table of Contents
Which are the main taxes covered by the Malaysia – France double tax treaty?
Under the stipulations of the Article 2, the double tax agreement (DTA) is applicable in Malaysia for the income tax, the supplementary income tax (which includes the development tax and the timber profits tax) and the petroleum income tax. Our team of specialists in company formation in Malaysia can offer in-depth assistance on the main rates at which these taxes are applicable to French businessmen.
Article 2 of the Malaysia – France DTA also stipulates the taxes applicable on the French territory, which refer to the income tax and the corporation tax (including the withholding tax). It is important to know that the agreement is applicable to both natural persons and legal entities, residents of the contracting states.
What is a permanent establishment in Malaysia?
The term permanent establishment takes into consideration numerous types of fixed places of business, where a company carries all its activities or part of its commercial activities. If a company operates through a permanent establishment in Malaysia, its profits will be taxed on the Malaysian territory, but only for the profits obtained in this country. Our team of consultants in company registration in Malaysia can offer more details on this matter.
A permanent establishment can refer to a place of manangement, a branch office, a factory, a workshop, a farm or a plantation or to a building site (as long as the the activities are developed for a period longer than six months). However, the term does not take into consideration the following:
- the usage of facilities for the purpose of storage or delivery of goods;
- the maintenance of goods that are stored in a location for the purpose of delivery or display;
- the maintenance of goods with the purpose of being processed by another company;
- having a fixed place of business for the purpose of collecting information.
Businessmen are invited to contact our team of representatives in company registration in Malaysia, who can offer more details on provisions of the DTA; they may also provide consultancy services on the tax benefits deriving from this treaty, as well as the tax compliance applicable to French investors operating on this market.