Malaysia`s double taxation conventions aim to create a more favourable tax environment. They are used to enable income-earning taxpayers to reduce or avoid the double taxation they would otherwise have suffered. Some dbaBa in Malaysia also offer beneficiaries preferential tax rates. The main reason why countries impose double taxation is to deter international trade. The reason is that the government of the country might believe that the commercial expertise that could have been involved in commercial transactions in the country is exported abroad. Another possible reason is that the two countries concerned do not have peaceful relations. In Malaysia, double taxation is generally in effect when a Malaysian subject enters into international or cross-border transactions on the territory of another country. DBA provides a mutual understanding of the treatment of income or benefits received by Malaysian citizens or citizens of the other country concerned, outside Malaysia or within Malaysia. Malaysia is part of the DBA, which brings together countries on every continent of the world. It has also limited agreements with some other countries. There are also some countries for which ratification of a DBA with Malaysia has not yet taken place. In the absence of a double taxation agreement, tax breaks can be granted by foreign tax credits.

When a DBA is in effect, the available credit is the total international tax paid or Malaysian tax that is collected, depending on whether it is lower. However, if there is no DBA, the available credit is limited to half of the foreign tax paid. A double taxation agreement (DBA) is a contract signed by two countries to minimize or eliminate double taxation of the same income. It is also known as the Double Taxation Convention and is classified as part of international taxation. In general, it crushes national tax legislation in cases where national tax legislation and the DBA are in conflict. Below is a list of countries with which Malaysia has a double taxation agreement (TDD): however, some activities carried out by a stable institution do not fall within the official definition. These activities include: In some cases, there are other taxes than income tax, which are subject to the provisions of the Malaysian DBA.