The taxation of trustee and trust funds in Malaysia
Produced in partnership with Adeline Wong, Istee Cheah and Lisa Yeoh of Wong & Partners
The taxation of trustee and trust funds in Malaysia

The following Private Client practice note produced in partnership with Adeline Wong, Istee Cheah and Lisa Yeoh of Wong & Partners provides comprehensive and up to date legal information covering:

  • The taxation of trustee and trust funds in Malaysia
  • Trust law principles
  • Taxation of trustees
  • Taxation of settlor
  • Taxation of beneficiary
  • Transfer taxes
  • Malaysian real property
  • Shares of a Malaysian private limited company

The taxation of trustee and trust funds in Malaysia

Trust law principles

A trust is not a legal entity in itself but is a legal relationship which involves a person (ie the settlor) transferring his or her assets to another person (ie the trustee) to manage and hold for him, for the benefit of a third party (ie the beneficiary).

The trustee may take the form of an individual or a company, and if the latter, can be either a professional trustee or an independent trustee. In order to avoid any complications and/or conflicts of interest, it may be worthwhile for the settlor to consider appointing a trustee who is wholly independent from the settlor and the beneficiary. The legal right to the trust assets belongs to the trustee who is tasked with the duty to manage and administer the assets in the best interests of the beneficiary. The beneficiary holds beneficial interest in the trust assets, until the capital of the trust is transferred to the beneficiary.

The main statutory sources of trust law in Malaysia are the Trustee Act 1949 and the Civil Law Act 1956.

Taxation of trustees

The Income Tax Act 1967 (ITA 1967) refers to trustees as the trust body and deems a trust body to be a tax resident for Malaysian tax purposes in a year of assessment (YA) if any trustee member of

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