Benta Sdn Bhd is a company resident in Malaysia and a Malaysian incorporated company for Malaysian tax purposes. The company source of income is solely from manufacturing operations conducted from a factory in Batu Berendam, Melaka. Benta Sdn Bhd is a wholly-owned subsidiary of Berry Ltd, a company incorporated in Belgium. For the year ended 31 January 2014, Berry Ltd granted Benta Sdn Bhd a loan to finance its manufacturing operations. The total interest payable to Berry Ltd amounted to RM82,930 and the payment was charged to the income statement of Benta Sdn Bhd. Required: State, with reasons, whether the interest payment of RM82,930 is derived from Malaysia. Explain how and how much it would be taxed (if applicable) under the Section 109 of the Income Tax Act, 1967.

Answer rating: 100% (QA)

Interest Paid to Nonresident persons payee Interest paid to NR payee is subject to withholding tax at 15 or any other rate as prescribed under double taxation agreement between Malaysia and the Country where the NR payee is tax resident This is final Tax Interest is deemed derived from Malaysia if a Responsibility for payment lies with the government or state government b Responsibility for payment lies with the a resident of Malaysia c Interest is charged as outgoing or expense against any income accruing in or derived from Malaysia Interest is not subject to withholding tax a ... View the full answer