Double Taxation Agreement (DTA) is a crucial agreement between two countries to avoid the taxation of the same income in both countries. Malaysia and Taiwan have signed a Double Taxation Agreement, which came into effect on 1 January 2017.

The Double Taxation Agreement helps companies and individuals to avoid the unnecessary burden of paying tax twice on the same income earned in both countries. The agreement outlines the rules and regulations for tax exemptions and reductions on various types of income, including dividends, interest, and royalties.

Under the agreement, taxes will be levied on income earned in a country of origin, and the same income will not be taxed in the country of residence. The treaty also provides for the reduction of withholding taxes on dividends, interest, and royalties.

For example, if a Malaysian company has a subsidiary in Taiwan, any profit earned by the subsidiary will undergo taxation in Taiwan. The profits will be taxed in Malaysia, and the Malaysian company can claim a tax credit for the taxes paid in Taiwan.

Moreover, the agreement outlines the permanent establishment (PE) rules that determine when a foreign company or entity has a taxable presence in the host country. The PE rules help to avoid tax evasion by foreign companies and entities, ensuring that they pay their fair share of taxes in the host country.

With the signing of the Double Taxation Agreement, Malaysia and Taiwan have strengthened their economic ties and created a more favorable environment for trade and investment. The agreement provides certainty and transparency for companies and individuals doing business in both countries.

In conclusion, the Double Taxation Agreement between Malaysia and Taiwan is a significant milestone in their economic relationship. The agreement provides benefits to both countries by reducing the tax burden on companies and individuals and promoting trade and investment. By adhering to the Double Taxation Agreement, Malaysia and Taiwan strengthen their economic partnership and promote growth and development in the region.