In Malaysia, capital gains and dividends from stocks are generally not taxed. However, as a Malaysian investing in the U.S. stock market, will you be subject to taxes? This article will provide you with an overview of the key tax considerations for Malaysians investing in U.S. securities, covering dividends, capital gains, and estate tax.
Dividends
When you receive dividends from U.S. companies, the U.S. Internal Revenue Service (IRS) typically withholds 30% of the dividend payment as tax. As a result, the dividend you receive will be 30% less than the amount announced by the company. This withholding tax applies to all
non-resident aliens — referring to individuals who are neither U.S. citizens nor U.S. nationals and who have not passed the green card test. In Malaysia, dividend income from U.S. investments is classified as foreign-sourced income. According to the Inland Revenue Board of Malaysia, starting from January 2022, all foreign...