Malaysia Certificate Of Residence (COR): How To Apply, Eligibility, And Purpose

Understanding international tax obligations can be complicated, Malaysia has simplified this process for individuals by introducing the Certificate of Residence Malaysia or COR. An official document issued by HASiL, the Inland Revenue Board of Malaysia, the COR verifies the residential status of a taxpayer under the Malaysian Tax Laws and DTAs.

This document is a must for every taxpayer looking to take advantage of the Double Taxation Avoidance Agreements and not be subjected to double income taxation. This guide covers the application process for the certificate of residence for tax purposes, the eligibility criteria, and its purpose in detail.

Purpose of a COR 

A Certificate of Residence (COR) acknowledges the taxpayer's resident status in Malaysia, enabling him/her to enjoy the tax benefits under the Avoidance of Double Taxation Agreement (DTA).

The key purposes of a certificate of tax residency are: 

• To enable Malaysian residents to avail themselves of the benefits of DTAs Malaysia has with other countries. 
• Avoid double taxation by paying tax only in Malaysia or the treaty country for the same income.
• To provide proof of the taxpayer's residence when conducting business or deriving income across borders.
• To help determine which country is entitled to taxpayer’s income under the DTA.

Eligibility Criteria for Certificate of Residence (COR) in Malaysia

If taxpayers are earning income from foreign countries, they are liable to pay taxes in that country. However, if that country has a DTA signed with Malaysia, taxpayers can enjoy reduced taxes or exemptions. 

However, taxpayers will only be eligible if they have a COR. Individuals and businesses must qualify as Malaysian tax residents to apply for a COR. The residence status is determined under the Income Tax Act 1967 (ITA) and Labuan Business Activity Tax Act 1990 (LBATA). 

Eligibility Requirements:

• Individuals: Must fulfill conditions specified in Section 7 of the ITA.
• Companies: Must fulfill eligibility criteria of Section 8 of the ITA.
• Trusts: Must fulfill eligibility criteria of Section 61(3) of the ITA for determining residency.
• Labuan Entities: Must fulfill eligibility criteria of Section 3B of the LBATA for residency criteria.

Application Process of COR Malaysia

Starting from 1st February 2023, the Certificate of Residence (COR) application must be submitted online through e-Residence. The application for a certificate of residence​ is as follows: 

Steps to Apply:

• Log in through e-Residence or scan the QR code provided by the Inland Revenue Board of Malaysia (HASiL) to proceed with an application.

• Your Income Tax Return Form (ITRF) should be submitted before applying.
• Fill in the application form and attach all necessary documents.
• Submit an application via the portal and wait for confirmation.

Documents Required

Fact check: Issuance of proof of tax residence with foreign tax authority forms is ceased. The Certificate of Residence, issued through e-Residence, will be sufficient evidence of tax residency.

Common Issues and Challenges

When applying for the COR, there could be a number of issues an applicant may encounter. The common ones are:

• Supporting documents not fully submitted or bearing incorrect information.
• Delays in processing time due to incorrect or incomplete information.
• Not submitting the Income Tax Return Form before application.
• Erroneous determination of tax residency status.
• Difficulties with access to the e-Residence portal or technical issues.

Additional Points to Consider

• The candidates will be issued a confirmation slip on successful submission of the application.
• The COR will be ready within 10 working days provided all necessary documents and information are complete and uploaded.
• After approval, the candidates will receive their admission with a PIN number through email.
• The PIN number can then be used to print the COR directly from the e-Residence system.
• No fee is charged for the issuance of the COR.

Conclusion 

The Certificate of Residence is an important document for Malaysian tax residents to claim tax benefits under DTA. The application is to be filed through the e-Residence portal and requires specified supporting documents depending on the category of the applicant. 

The COR is proof of tax residency and thus enables the individual or entities to enjoy reduced rates of tax or exemptions in foreign countries. Applicants can receive their Certificate of Residence in 10 working days without a fee for its issuance by filling out all the necessary information correctly.