Double Taxation Agreement Malaysia Uk

Double Taxation Agreement between Malaysia and UK: Understanding the Benefits

Double taxation is a common problem faced by individuals and businesses operating in two different countries. This happens when both the countries have the right to tax the same income or profits. It could result in higher tax payments and reduced profits. To avoid this problem, countries sign Double Taxation Agreement (DTA) to ensure that taxes paid in one country are recognized in the other. Malaysia and the UK have signed a DTA to prevent double taxation and promote business between the two countries.

The DTA between Malaysia and the UK was signed on September 14, 2012, and came into effect on January 1, 2013. The agreement applies to individuals and companies that are resident in either of the countries. It covers the income tax, corporation tax, and petroleum tax levied by the respective governments. The DTA has several benefits for businesses and individuals operating in both countries. Let`s take a look at some of them.

Reduced Taxation

The DTA ensures that income or profits earned in one country are not taxed twice. The agreement specifies the tax rates applicable to various types of income, such as dividends, interest, royalties, and capital gains. For instance, if a Malaysian company has a branch in the UK, the profits earned by the branch are taxable in the UK. However, the Malaysian company can claim a credit for the tax paid in the UK against its tax liability in Malaysia. This way, the same income is not taxed twice.

Avoidance of Double Taxation

The DTA provides for the avoidance of double taxation in several ways. For instance, it specifies the rules for determining the residency status of individuals and companies. It also provides for the elimination of double taxation in cases where both countries levy taxes on the same income. The agreement also sets out the procedures for resolving disputes arising out of the interpretation or application of the agreement.

Encourages Cross-border Investment

The DTA provides a favorable tax environment for individuals and businesses to invest in the UK or Malaysia. The agreement reduces the uncertainty and risks associated with taxation and encourages cross-border trade, investment, and transfer of technology. This is particularly beneficial for small and medium-sized businesses that want to expand their operations overseas.


The DTA between Malaysia and the UK provides a stable and predictable tax environment for businesses and individuals operating in both countries. It reduces the tax burden on businesses and ensures that the same income is not taxed twice. The agreement also promotes cross-border investment and trade between Malaysia and the UK. If you are a business owner in either of these countries, it is important to understand the DTA and how it affects your tax liabilities. Seeking expert advice from a tax consultant can help you optimize your tax position and take advantage of the benefits provided by the agreement.