Maldives and Malaysia on Wednesday signed an agreement on the Elimination of Double Taxation on Income Tax and Prevention of Tax Evasion and Avoidance.

The agreement was signed at the parliament building in Kuala Lumpur.

The agreement was signed by Malaysia's Deputy Minister of Finance, YB Datuk Seri Ahmad Maslan and Finance Minister of Maldives, Ibrahim Ameer.

The aim of the agreement is to avoid double taxation on the same income in Malaysia and the Maldives, providing tax certainty to taxpayers in both countries. The agreement also covers the right to determine taxation and the reduction of withholding tax rates on certain incomes such as dividends, interest, royalties and fees for technical services based on reciprocity for cross-border economic activities.

The agreement will enter into force after the ratification procedures by both parties is completed.

With this agreement, the countries are expected to further facilitate trade and investment. Malaysia's trade volume to the Maldives has increased with bilateral trade on an upward trend.

In 2022, Malaysia’s total trade to the Maldives amounted to RM1,009.0 million (USD227 million), an increase of 100.2% from RM504 million (USD122 million) in 2021. Based on this positive trend, bilateral trade between Malaysia and the Maldives is expected to grow further.