Australian Tax Treaties
Malaysian Agreement
AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF MALAYSIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
ARTICLE 12
Royalties
1.
Royalties arising in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.
2.
Such royalties may be taxed in the Contracting State in which they arise, and according to the laws of that State but the tax so charged shall not exceed 15 per cent of the gross amount of the royalties.
3.
The provisions of paragraphs 1 and 2 shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, has in the other Contracting State from which the royalties are derived a permanent establishment with which the right, property, knowledge, information or assistance giving rise to the royalties is effectively connected. In such a case the provisions of Article 7 shall apply.
4.
Royalties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political sub-division, a local authority or statutory body thereof or a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether he is a resident of one of the Contracting States or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
5.
Where the payer is related to the person beneficially entitled to the royalties and the amount of the royalties paid or credited, having regard to the use, to the right to use, or to the knowledge, information or assistance, for which they are paid or credited, exceeds the amount which might be expected to have been agreed upon by the payer and the person so entitled if they had not been related, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the royalties paid or credited shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement. For the purposes of this paragraph, a person is related to another person if either person participates directly or indirectly in the management, control or capital of the other, or if any third person or persons participate directly or indirectly in the management, control or capital of both.
6.
The term " royalties " in this Article means payments or credits of any kind to the extent to which they are made as consideration for -
(a) the use of, or the right to use, any -
(b) the supply of scientific, technical, industrial or commercial knowledge or information;
(c) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such right or property as is described in paragraph (a)(i), any such equipment as is described in paragraph (a)(ii), or any such knowledge or information as is described in paragraph (b);
(d) the use in connection with television, radio or other broadcasting, or the right to use in connection with such broadcasting, visual images or sounds, or both, transmitted by:
(e) the use of, or the right to use, some or all of the part of the radiofrequency spectrum specified in a relevant licence; or
(f) total or partial forbearance in respect of the use of a property or right referred to in this paragraph.
As amended by the Malaysian Protocol (No 1), the Malaysian Exchange of Letters,
the Malaysian Protocol (No 2) and the Malaysian Protocol (No 3)
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) has modified the application of this tax treaty. A synthesised text of the MLI and this tax treaty is available to facilitate the understanding of how the MLI modifies this tax treaty.
Royalties arising in one of the Contracting States, being royalties to which a resident of the other Contracting State is beneficially entitled, may be taxed in that other State.
2.
Such royalties may be taxed in the Contracting State in which they arise, and according to the laws of that State but the tax so charged shall not exceed 15 per cent of the gross amount of the royalties.
3.
The provisions of paragraphs 1 and 2 shall not apply if the person beneficially entitled to the royalties, being a resident of one of the Contracting States, has in the other Contracting State from which the royalties are derived a permanent establishment with which the right, property, knowledge, information or assistance giving rise to the royalties is effectively connected. In such a case the provisions of Article 7 shall apply.
4.
Royalties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political sub-division, a local authority or statutory body thereof or a resident of that State for the purposes of its tax. Where, however, the person paying the royalties, whether he is a resident of one of the Contracting States or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
5.
Where the payer is related to the person beneficially entitled to the royalties and the amount of the royalties paid or credited, having regard to the use, to the right to use, or to the knowledge, information or assistance, for which they are paid or credited, exceeds the amount which might be expected to have been agreed upon by the payer and the person so entitled if they had not been related, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the royalties paid or credited shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement. For the purposes of this paragraph, a person is related to another person if either person participates directly or indirectly in the management, control or capital of the other, or if any third person or persons participate directly or indirectly in the management, control or capital of both.
6.
The term " royalties " in this Article means payments or credits of any kind to the extent to which they are made as consideration for -
(a) the use of, or the right to use, any -
(i) copyright, patent, design or model, plan, secret formula or process, trade mark or other like property or right;
(ii) industrial, commercial or scientific equipment; or
(iii) motion picture film or tape for radio or television broadcasting;
(b) the supply of scientific, technical, industrial or commercial knowledge or information;
(c) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such right or property as is described in paragraph (a)(i), any such equipment as is described in paragraph (a)(ii), or any such knowledge or information as is described in paragraph (b);
(d) the use in connection with television, radio or other broadcasting, or the right to use in connection with such broadcasting, visual images or sounds, or both, transmitted by:
(i) satellite; or
(ii) cable, optic fibre or similar technology;
(e) the use of, or the right to use, some or all of the part of the radiofrequency spectrum specified in a relevant licence; or
(f) total or partial forbearance in respect of the use of a property or right referred to in this paragraph.
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