Malaysia Issues Practice Note on Tax Treatment of Digital Advertising by Nonresidents

On 16 March 2018, the Malaysian Inland Revenue Board (IRB) issued Practice Note No. 1/2018, which outlines the tax implications of income earned by a nonMalaysian tax resident from the provision of digital advertising. The one-page Note discusses briefly whether such payments are subject to Malaysian income tax as business income or withholding tax as royalty income or income under section 4A(ii) of the Income Tax Act 1967.

Nonresident's presence in Malaysia. The tax treatment in Malaysia would depend on whether the nonresident has a permanent establishment (PE) (where a tax treaty applies) or a business presence (where no treaty applies) in the country. The tax treatments are:

* If the nonresident...