The Agreement on the prevention of double income taxation between the Republic of Serbia and Malaysia ceased to be valid

On 14 March, 2019 the National Assembly of the Republic of Serbia adopted the Law on Termination of the Law on Ratification of the Agreement between the Federal Executive Council of the Assembly of the Socialist Federal Republic of Yugoslavia and the Government of Malaysia on Avoidance of Double taxation with respect to taxes on income, with Protocol (“the Law), published in the Official Gazette – International Agreements No. 3/2019 dated 18 March, 2019, effective eight days after publishing on 26 March, 2019.

After the adoption of the Law, the Agreement on avoidance of double taxation with respect to income tax (hereinafter: The Agreement) which came into effect on January 1, 1991 and obliged the Republic of Serbia as a legal successor of the former SFRY ceased to be in effect.

The Agreement ceased to be valid because the Government of the Republic of Serbia received notification, as unofficial information, that in reality Malaysia does not apply the Agreement and was taxing the residents of the Republic of Serbia who have already payed the income tax. After the Government of the Republic of Serbia sent a request to the authorities of Malaysia to express their opinion on the matter, the Ministry of Finance of Malaysia stated that the Agreement signed between the former SFRY and Malaysia is not applicable in relations between the Republic of Serbia and Malaysia, and the former two should sign a new bilateral agreement on the prevention of double taxation. Due to the inapplicability in practice, the Republic of Serbia has made a decision to terminate the Agreement by the Law.