IRBM has updated the Frequently Asked Questions (FAQS) on international tax issues due to COVID-19 travel restrictions

On 09th October 2020, IRBM has updated the Frequently Asked Questions (FAQS) on international tax issues due to COVID-19 travel restrictions.

The updated FAQs further clarify the issues relating to the followings:

(a)    Cross border employment income for individual; and

(b)    Creation of permanent establishments (PEs) for companies;

 The period of movement control period in FAQ is updated from 18th March until 31st December 2020 as previously is until 31st August 2020.

01 CROSS BORDER EMPLOYMENT INCOME – NEW QUESTIONS

If you are non - resident in Malaysia and you have accepted employment offer from company in Malaysia. However, you are unable to enter Malaysia due to COVID-19 travel restrictions and currently working from overseas.

02What is the consequences?

You are consider not exercising an employment in Malaysia. Your employment income can be taxed under local tax law in the country exercised employment. 

If you are non - resident in Malaysia and present in Malaysia due to Covid-19 travel restriction. During movement control order, you ceased employment from foreign employers and accepted employment offer from company in Malaysia.

03What is the consequences?

Since you did not return to your home country, you are considered present in Malaysia permanently. Your employment to be considered exercising in Malaysia and your employment income with prior foreign employer would be taxed in Malaysia.

04PERMANENT ESTABLISHMENT

IRB further clarified the followings:

The temporary presence of the employees of non-resident companies which do not have a Double Tax Agreement with Malaysia will not be deemed to have a place of business in Malaysia.