The double tax agreement between Malaysia and Cambodia is an agreement that has been in operation since 2019. The agreement aims to prevent double taxation on income and profits generated by businesses operating in both countries.
Double taxation occurs when the same income or profits are taxed twice by two different countries. This can happen when a business operates in one country but generates income or profits in another country. Without a double tax agreement, businesses may be subject to tax in both countries, resulting in a financial burden and discouraging cross-border trade.
The agreement between Malaysia and Cambodia is designed to promote economic cooperation between the two countries. It applies to all types of income, including dividends, interests, royalties, and capital gains. The agreement sets out the rules for determining the country of residence of taxpayers, as well as the taxation rates for different types of income.
Under the agreement, Malaysia and Cambodia have agreed to reduce or eliminate double taxation. This means that businesses operating in either country will be subject to tax only in the country where the income or profits are generated. For example, if a Malaysian company operates in Cambodia and generates income, it will be subject to Cambodian tax only. Likewise, if a Cambodian company operates in Malaysia and generates income, it will be subject to Malaysian tax only.
The double tax agreement between Malaysia and Cambodia is significant for businesses operating between the two countries. It provides certainty and clarity on tax obligations, which helps to reduce business costs and promotes cross-border investment. The agreement also helps to avoid disputes and encourages cooperation between tax authorities.
Overall, the double tax agreement between Malaysia and Cambodia is a positive development for businesses operating in both countries. It provides clarity and certainty on tax obligations, which helps to encourage cross-border investment and trade. The agreement also promotes economic cooperation between the two countries, which is essential for growing and developing the region`s economy.