The answer to the question can be YES & NO.
Income Tax Act states that with effect from the year of assessment 2004, income derived from outside Malaysia and received in Malaysia by a resident individual is exempted from tax.
The key point here is that, the income must be derived from outside Malaysia meaning the money remitted from outside Malaysia & the money is not generated in Malaysia meaning the server that host the website must be outside Malaysia.
This was based on my communication with IRB Contact Center. Below is my question & answer by them.
My question to IRB
2013-03-24 : I have a question regarding Income Remitted from Outside Malaysia. I read in IRB website, state that With effect from the year of assessment 2004, income derived from outside Malaysia and received in Malaysia by a resident individual is exempted from tax.
My question is I received income from Google Inc from advertising through my website. Is this income taxable? The income remitted to me from United States.
Answer by IRB
Dear Sir/Madam
Your feedback dated 24/03/2013 refers.
For your information:
Income Remitted from Outside Malaysia
With effect from the year of assessment 2004, income derived from outside Malaysia and received in Malaysia by a resident individual is exempted from tax.
In your case it depends on your website host provider. If your website host provider registered in Malaysia, the income that you receive is taxable as if you are exercising business in Malaysia.
If you have further enquiry, do not hesitate to send us your feedback using our online form which
can be accessed from the following link: http://www.hasil.gov.my/smp/
Thank you.
“HASIL4U”
“HASIL YOUR FEEL GOOD PARTNER”
Pusat Khidmat Pelanggan
Jabatan Khidmat Korporat
Lembaga Hasil Dalam Negeri Malaysia
______________________________
This information is not only limited to Google AdSense but to all non-Malaysian based advertising network. Other good advertising networks that I recommend is Infolinks & media.net.
Based on this information, if you are Malaysian Blogger or Webmaster, it will be very advantageous to you if you
- Host your website on a server that is not located in Malaysia. If IRB conducts an audit, you may need to show proof.
- Use non-Malaysian based advertising network.
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