Is a TransferWise exchange a 'Remittance'?
Mar 5th 2023 | 7:53 pm
#16
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Re: Is a TransferWise exchange a 'Remittance'?
See August 2022: Malaysia now taxes foreign-sourced income not taxed at source
That post contains the latest official documents and guidelines for the new tax on foreign income payable from tax year 2022.
There is no mention that I can find that foreign savings or capital gains brought into Malaysia are taxable, only income.
That post contains the latest official documents and guidelines for the new tax on foreign income payable from tax year 2022.
There is no mention that I can find that foreign savings or capital gains brought into Malaysia are taxable, only income.
Thanks for the interesting write-up of your experiences in Thailand and at the LHDN. But something is really puzzling me: Even remitted savings are now taxable in Malaysia?? I thought the new statute only applies to income remitted to Malaysia? What the tax office lady said doesn't make sense. Savings abroad may have accrued from several sources that are non-taxable, such as personal gifts, inheritance, capital gains from long-term holdings etc. If those monies are not taxable back in the home country, and not taxable if they had arisen in Malaysia, why should they be taxable simply because they have crossed the border?
Flyguy had this confirmed from the tax office (LHDN); I received the same explanation from a tax advisor.
Mar 5th 2023 | 8:35 pm
#17
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Joined: Jun 2015
Posts: 293
Re: Is a TransferWise exchange a 'Remittance'?
The LHDN document which you refer to in that other thread answers your question in this thread. That document contains several examples. Please go to example 8. It shows an example of a person who remits money from an investment account outside Malaysia into Malaysia. Although it is a savings/investment account, it is considered income by the time the money is transferred into Malaysia. The amount of tax you have to pay in Malaysia over this remittance depends on how it was taxed in the other country. See that example for details.
Flyguy had this confirmed from the tax office (LHDN); I received the same explanation from a tax advisor.
Flyguy had this confirmed from the tax office (LHDN); I received the same explanation from a tax advisor.
Example 7
Foreign income received in Malaysia has been subjected to tax in the country of origin
Eric, a Malaysian resident, works as an accountant in an architectural firm in Singapore from 2020. Eric and his family live in Johor Bahru and he commutes from his house to Singapore every day. At the end of each month, he brings back the salary received from his employment in Singapore to Malaysia and the employment income is taxed in Singapore. Part of his salary was credited to a retirement fund in Singapore by his employer.
Under P.U.(A) 234/2022, income arising from Singapore brought into Malaysia by Eric is exempted from tax in Malaysia since the income has been taxed in Singapore.
Foreign income received in Malaysia has been subjected to tax in the country of origin
Eric, a Malaysian resident, works as an accountant in an architectural firm in Singapore from 2020. Eric and his family live in Johor Bahru and he commutes from his house to Singapore every day. At the end of each month, he brings back the salary received from his employment in Singapore to Malaysia and the employment income is taxed in Singapore. Part of his salary was credited to a retirement fund in Singapore by his employer.
Under P.U.(A) 234/2022, income arising from Singapore brought into Malaysia by Eric is exempted from tax in Malaysia since the income has been taxed in Singapore.
Example 8
Foreign income received in Malaysia has been given incentive / tax exemption in the country of origin
The facts are same as in Example 7 except that Eric has terminated his employment in Singapore on 31.3.2025. On 1.5.2025, Eric withdraws his retirement fund saving in Singapore and brings it into Malaysia.
Any saving in an approved retirement fund in Singapore are tax-exempt in Singapore. Based on P.U.(A) 234/2022 and this Guideline, the retirement fund which brought into Malaysia by Eric is not taxable in Malaysia due to the tax- exempt in Singapore.
Foreign income received in Malaysia has been given incentive / tax exemption in the country of origin
The facts are same as in Example 7 except that Eric has terminated his employment in Singapore on 31.3.2025. On 1.5.2025, Eric withdraws his retirement fund saving in Singapore and brings it into Malaysia.
Any saving in an approved retirement fund in Singapore are tax-exempt in Singapore. Based on P.U.(A) 234/2022 and this Guideline, the retirement fund which brought into Malaysia by Eric is not taxable in Malaysia due to the tax- exempt in Singapore.
5.2.2 Foreign income received in Malaysia by a resident individual
5.2.2.1 All foreign income other than partnership income received in Malaysia by a resident individual from 1 January 2022
until 31 December 2026 is exempt from tax provided the income has been subjected to tax in the country of origin.
5.2.2.2 Qualifying conditions
In determining whether foreign income received has been taxed in the country of origin, the conditions are as follows:
(a) Tax has been imposed in the country of origin on foreign income received in Malaysia where the tax paid or payable in the country of origin is income tax or withholding tax; or
(b) Tax is not imposed in the country of origin due to certain reasons as follows:
(i) Foreign income received in Malaysia is not subject to tax in the country of origin due to the country's taxation system.
(ii) Foreign income received in Malaysia is not subject to tax in the country of origin because the individual's income does not reach the taxability
amount in the country of origin.
(iii) Income is given an exemption through a tax incentive.
(iv) Foreign dividend income received by an individual in Malaysia has been subjected to underlying tax.
(v) Foreign dividend income is paid from underlying profits arising out of operating profits which has not been subjected to tax due to:
(A) Unabsorbed losses or capital allowances;
(B) Arising from capital gains;
(C) Enjoyed tax incentives in compliance with substantive requirements in the country; or
(D) Tax regulations under the tax consolidation regime in the country of origin.
5.2.2.1 All foreign income other than partnership income received in Malaysia by a resident individual from 1 January 2022
until 31 December 2026 is exempt from tax provided the income has been subjected to tax in the country of origin.
5.2.2.2 Qualifying conditions
In determining whether foreign income received has been taxed in the country of origin, the conditions are as follows:
(a) Tax has been imposed in the country of origin on foreign income received in Malaysia where the tax paid or payable in the country of origin is income tax or withholding tax; or
(b) Tax is not imposed in the country of origin due to certain reasons as follows:
(i) Foreign income received in Malaysia is not subject to tax in the country of origin due to the country's taxation system.
(ii) Foreign income received in Malaysia is not subject to tax in the country of origin because the individual's income does not reach the taxability
amount in the country of origin.
(iii) Income is given an exemption through a tax incentive.
(iv) Foreign dividend income received by an individual in Malaysia has been subjected to underlying tax.
(v) Foreign dividend income is paid from underlying profits arising out of operating profits which has not been subjected to tax due to:
(A) Unabsorbed losses or capital allowances;
(B) Arising from capital gains;
(C) Enjoyed tax incentives in compliance with substantive requirements in the country; or
(D) Tax regulations under the tax consolidation regime in the country of origin.
Last edited by Epicurious; Mar 5th 2023 at 8:37 pm.
Mar 9th 2023 | 1:50 pm
#18
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Joined: Dec 2016
Posts: 199
Re: Is a TransferWise exchange a 'Remittance'?
Is money received in your (Transfer)Wise account received in Malaysia? Wise has a Malaysia e-money license, and the money in your Wise account for Malaysia residents are held by Wise Malaysia. What about USD received in Wise using the USD account details from USA? If the Wise account is Malaysian held by Wise Malaysia, then i'd assume USD (and every other currency) is also received "in Malaysia" even if you use the US routing and account numbers to receive USD. ?
Mar 9th 2023 | 7:53 pm
#19
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Joined: Aug 2015
Posts: 988
From: Penang
Re: Is a TransferWise exchange a 'Remittance'?
Is money received in your (Transfer)Wise account received in Malaysia? Wise has a Malaysia e-money license, and the money in your Wise account for Malaysia residents are held by Wise Malaysia. What about USD received in Wise using the USD account details from USA? If the Wise account is Malaysian held by Wise Malaysia, then i'd assume USD (and every other currency) is also received "in Malaysia" even if you use the US routing and account numbers to receive USD. ?
It sounds complicated but in reality it is rather easy to understand and use.
Last edited by SushiFan; Mar 9th 2023 at 7:57 pm.
Mar 9th 2023 | 8:04 pm
#20
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Joined: Dec 2016
Posts: 199
Re: Is a TransferWise exchange a 'Remittance'?
A Wise account is a multi-currency account. Each currency you hold in that account is "parked" at a bank in the country of said currency. For example: if you hold USD and EUR and MYR in your Wise account the USD amount is kept at a bank in the US, the EUR amount is kept at a bank in Europe and the MYR is kept at a bank in Malaysia. If you want to deposit for example USD into your Wise account you have to specify the bank account number for your USD portion of your Wise account. Each time when you want to add another currency to your Wise account Wise opens a bank account number at a local bank for that currency's country before you can deposit that currency into your Wise account. Of course is it also possible to convert money from one currency in your account to another, for example convert some of the USD in your account to EUR, and get that automatically added to the EUR you already hold at Wise.
It sounds complicated but in reality it is rather easy to understand and use.
It sounds complicated but in reality it is rather easy to understand and use.
Mar 10th 2023 | 11:40 am
#21
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Joined: Jun 2015
Posts: 293
Re: Is a TransferWise exchange a 'Remittance'?
Going back to the original question, from the Glossary in LHDN.AG.600-1/7/3 :
4.2 "Received in Malaysia" means transferred or brought into Malaysia whether in the form of cash or through electronic funds transfer; or both.
4.3 “Cash†means notes, coins and cheques;
4.4 "Electronic fund transfer" means bank transfer (e.g. credit transfer, debit transfer), payment card (debit card, credit card and charge card), electronic money (e-money), privately-issued digital assets (e.g. crypto-assets, stablecoins) and Central bank digital currency (CBDC)
4.3 “Cash†means notes, coins and cheques;
4.4 "Electronic fund transfer" means bank transfer (e.g. credit transfer, debit transfer), payment card (debit card, credit card and charge card), electronic money (e-money), privately-issued digital assets (e.g. crypto-assets, stablecoins) and Central bank digital currency (CBDC)
Mar 11th 2023 | 1:28 am
#22
Lost in BE Cyberspace
Joined: Jul 2016
Posts: 11,628
Re: Is a TransferWise exchange a 'Remittance'?
A Wise account is a multi-currency account. Each currency you hold in that account is "parked" at a bank in the country of said currency. For example: if you hold USD and EUR and MYR in your Wise account the USD amount is kept at a bank in the US, the EUR amount is kept at a bank in Europe and the MYR is kept at a bank in Malaysia. If you want to deposit for example USD into your Wise account you have to specify the bank account number for your USD portion of your Wise account. Each time when you want to add another currency to your Wise account Wise opens a bank account number at a local bank for that currency's country before you can deposit that currency into your Wise account. Of course is it also possible to convert money from one currency in your account to another, for example convert some of the USD in your account to EUR, and get that automatically added to the EUR you already hold at Wise.
It sounds complicated but in reality it is rather easy to understand and use.
It sounds complicated but in reality it is rather easy to understand and use.
Mar 11th 2023 | 1:48 am
#23
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Joined: Dec 2016
Posts: 199
Re: Is a TransferWise exchange a 'Remittance'?
Mar 11th 2023 | 8:03 pm
#24
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From: Penang
