In addition, the Indonesian President adopted, on 4 In addition, Presidential Regulation 77 of 2017 ratifying the protocol amending the DBA between Indonesia and Malaysia, signed in Kuala Lumpur on 12 September 1991, was amended by Protocol 77/2017, signed in Bukit Tinggi on 12 January 2006. PR 77/2017 ratified the latest protocol amending the Indonesia-Malaysia DBA, signed on 20 October 2011 in Lombok, West Nusa Tenggara. The most important amendment is to extend the scope of information provision, which increases the ability of a certifying body to request information on issues they did not yet have at their disposal. Indonesia`s protocol to its convention with the Netherlands for the prevention of double taxation (DBA) comes into force on 1 October 2017. The DBAs have helped facilitate the international flow of investment, trade, financial activities and technical knowledge between Malaysia and other countries. This allows both countries concerned to benefit in a way that is not directly linked to taxation. As a result, Malaysia and the countries with which they are part of a DBA have become more interdependent. This does not apply only economically; it can also sometimes be applied to social aspects. Malaysia`s double taxation conventions aim to create a more favourable tax environment. They are used to enable income-earning taxpayers to reduce or avoid the double taxation they would otherwise have suffered.
Some dbaBa in Malaysia also offer beneficiaries preferential tax rates. In the absence of a double taxation agreement, tax breaks can be granted by foreign tax credits. When a DBA is in effect, the available credit is the total international tax paid or Malaysian tax that is collected, depending on whether it is lower. However, if there is no DBA, the available credit is limited to half of the foreign tax paid. In Malaysia, double taxation is generally in effect when a Malaysian subject enters into international or cross-border transactions on the territory of another country. DBA provides a mutual understanding of the treatment of income or benefits received by Malaysian citizens or citizens of the other country concerned, outside Malaysia or within Malaysia. The main reason why countries impose double taxation is to deter international trade.