Foreign source income tax exemption to reduce companies’ earnings risk

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KUALA LUMPUR: CGS-CIMB is taking a constructive view of the tax exemption on foreign-sourced dividends for corporates as it will reduce the earnings dangers for corporations with giant abroad investments.

In a word, the agency stated that it had been involved in regards to the authorities’s earlier resolution to withdraw the tax exemption on overseas source income (FSI) for corporates in Budget 2022, because the change will completely have an effect on future income streams from abroad investments.

“This is constructive for Sime Darby, Sime Darby Plantations, PPB Group and KLK, based mostly on preliminary assessments,” it added.

Ministry of Finance (MoF) has prolonged the tax exemption on FSI of people and dividend income from corporates for 5 years from Jan 1, 2022 to Dec 31, 2026.

Meanwhile, the ministry had additionally imposed the next cap on stamp obligation on share transactions in Malaysia until Dec 31, 2026, which might decrease transaction prices for the buying and selling of shares.

“We estimate the most recent resolution will lower whole transaction prices for Malaysia to 0.2 per cent from 0.32 per cent for US$1 million (RM4.2 million) commerce worth, assuming a brokerage price of 0.15 per cent.

“This is constructive for stockbrokers and Bursa Malaysia as the upper cap on stamp obligation for the subsequent 5 years would enhance Malaysia’s competitiveness in opposition to its friends,” it added. – Bernama



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