The Malaysian government is introducing retrospective legislation to exempt the payment of interest on government and domestic currency bonds to non-resident investors from the 15% withholding tax.
All securities issued by the Government of Malaysia, debentures issued in Malaysian Ringgit (MYR), and Islamic securities issued in Malaysian Ringgit (MYR) qualify for the exemption. The amendment will apply on a retrospective basis, from 11 September 2004.
“All non-resident companies can file for withholding tax refunds,” explains a spokesman for Citigroup in Kuala Lumpur. “With the amendment, there will be no longer be any withholding tax of 15% applied at source on interest income earned by non-resident companies. Citigroup has spoken to the Inland Revenue Board of Malaysia (IRB), which has advised that Citibank Malaysia can claim on behalf of the client provided the client gives explicit authority to Citibank Malaysia to do so.”