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The Agreement For Avoidance of Double Taxation serves as a crucial legal instrument in Malaysia's international tax framework, designed to facilitate cross-border trade and investment while preventing double taxation of the same income in different jurisdictions. This agreement becomes necessary when entities or individuals have tax obligations in both Malaysia and another country, providing clear guidelines on which jurisdiction has the right to tax different types of income. The document incorporates Malaysia's domestic tax laws, international tax principles, and specific bilateral arrangements, typically following the OECD Model Tax Convention structure while adapting to Malaysia's specific requirements and negotiated terms with the partner country. It includes provisions for tax relief methods, anti-abuse measures, and administrative cooperation between tax authorities, making it essential for international business operations and cross-border investments involving Malaysia.

1. Parties: Identification of the contracting states entering into the agreement

2. Background: Context and purpose of the agreement, including the desire to promote economic cooperation and avoid double taxation

3. Definitions: Comprehensive definitions of terms used throughout the agreement, including 'resident', 'permanent establishment', and various types of income

4. Scope of Agreement: Specifies the taxes and territories covered by the agreement

5. Residence: Rules for determining tax residence and handling dual residence scenarios

6. Permanent Establishment: Definition and conditions constituting a permanent establishment

7. Income from Immovable Property: Treatment of income derived from real estate and natural resources

8. Business Profits: Rules for taxation of business profits and attribution principles

9. Shipping and Air Transport: Treatment of profits from international transportation

10. Associated Enterprises: Provisions dealing with related party transactions and transfer pricing

11. Dividends: Taxation rules for dividend payments between the contracting states

12. Interest: Provisions governing taxation of interest payments

13. Royalties: Rules for taxation of royalty payments

14. Capital Gains: Treatment of gains from alienation of property

15. Methods for Elimination of Double Taxation: Specific mechanisms to avoid double taxation

16. Non-discrimination: Provisions ensuring fair treatment of residents of both states

17. Mutual Agreement Procedure: Process for resolving disputes between tax authorities

18. Exchange of Information: Framework for information sharing between tax authorities

19. Entry into Force: Provisions regarding when the agreement becomes effective

20. Termination: Conditions and procedures for terminating the agreement