Under the DBA, double taxation is avoided by granting, subject to the provisions of Malaysia`s tax law, any taxation paid in Cambodia by Malaysian companies under the DBA, as a credit to the tax payable in Malaysia on the same income. Similarly, for Cambodian companies, the tax paid in Malaysia will be allowed as a deduction from the tax due on the same income in Cambodia. The signing of the agreement is one of the main items on Mahathir`s agenda. In Cambodia, double taxation is abolished by deduction of the income tax of the Cambodian-domiciled island up to the tax paid in Hong Kong. In addition, the Double Taxation Convention provides for a mechanism for the exchange of information between the tax authorities of Cambodia and Hong Kong to improve the enforcement of tax against tax evasion, the erosion of the base and the transfer of profits by taxpayers. “The Malaysian government has finally completed its constitutional procedures for ratifying the Double Taxation Convention. This ratification will allow the agreement to enter into force, allowing both parties to implement it accordingly. He said dBA also provides a mechanism for exchanging information between tax authorities and helps prevent tax evasion and evasion. On the other hand, DBAs are international treaties that help reduce cases of double taxation of income and wealth. “Free trade agreements are more complex and broader and more closely linked to the promotion of trade flows, rather than avoiding double taxation.
However, the kingdom`s efforts to achieve both can only sustain the economy at a time when they are most needed,” he said. Malaysia`s ambassador to Cambodia, Eldeen Husaini Mohd Hashim, said the agreement would boost investment and trade between the two countries. “In order to increase the volume of trade and investment between Cambodia and Malaysia, Mahathir and I have agreed to allow the institutions concerned in both countries to explore opportunities to further develop our cooperation in these areas,” he said. In practical terms, the provisions of the Cambodia-Hong Kong Double Taxation Convention contain a 10% withholding tax for each of the four categories: dividends; Copyright; Technical services and interest – by finding that interest collected in one of the two countries and paid to certain public bodies in the other country may be tax-exempt in the state where the interest was collected. In addition to the DBA, Dr Mahathir will also witness the signing of the Malaysian-Cambodia Cooperation Agreement on Tourism Cooperation to promote the number of tourists in both countries. The two heads of state and government shared their view that the Comprehensive Regional Economic Partnership (RCEP) will contribute to regional economic integration, growth and safeguarding the multilateral trading system, he said in the joint statement, adding that the two heads of state and government expressed the need to conclude the agreement before the end of the year.