By Tan Thai Soon
Section 127 (1) - Exemptions from tax
Any income specified in Part 1 of Schedule 6 shall be exempt from tax
Part 1 Schedule 6, para 28 (1)
Income of any person, other than a resident company carrying on the business of banking, insurance or sea or air transport, for the basis year of assessment derived from sources outside Malaysia and received in Malaysia.
Comment:
1. Section 2(1)
Provides that "person" includes a company, a body of persons and a corporation sole.
In other words, its cover individual, company or holding company incorporated in Malaysia, & business enterprise.
2. This section has specifically excludes a resident company carrying on the business of banking, insurance or sea or air transport. In other words, except from the above four type of business, all other types of business can enjoy the tax exemption from dividend received from foreign source.
3. The tax exemption is based on the principle that the income is not derived in Malaysia.
4. The rationale for the exemption is to encourage Malaysian individuals or companies to remit back their income from oversea investment.
