Recently, I invested in some stock in the U.S. stock market. I was wondering:
- Whether there are capital gains taxes if I sell stock? Do they take account into my foreign exchange loss?
- Are there any dividend taxes for my received dividends?
Found a great article (with bibliography) that covers taxation on investment activity by non resident aliens - even covers the special 15% tax on dividends for Canadian residents.
It's (dividend tax rate) generally 30% for other NRAs (your 2nd question).
And it confirmed my suspicion that there are no capital gains taxes for NRAs. (1st Q)
The country from which you purchase stock cannot charge you tax on either income or capital gains. Taxation is based on residency, so even when you purchase foreign stock its the tax laws of Malaysia (as your country of residence) that matter. At the time of writing, Malaysia does not levy any capital gains tax and there is no income tax charged on dividends so you won't have to declare or pay any tax on your stocks regardless of where you buy them from.
The only exception to this is Dividend Withholding Tax, which is a special tax taken by the government of the country you bought the stock from before it is paid to your account. You do not need to declare this tax as it his already been taken by the time you receive your dividend.
The US withholding tax rate on dividends is 30%, although this can be reduced to 15% if there as a tax treaty in place between the US and your country of residence.
Malaysia does have a double taxation agreement with the US (see here: http://www.mida.gov.my/env3/index.php?page=double-taxation-agreement) but it is flagged as a "limited" agreement. You'd need to find the full text of the agreement to see whether a reduced rate of dividend withholding tax would be available in the Malaysia/US treaty.
See my other answer for more details on withholding taxes and how to partially reclaim under a double tax treaty: What is the dividend tax rate for UK stock
Note: Although the taxation rules of both countries are similar, I am a resident of Singapore not Malaysia so I can't speak from first hand experience, but current Malaysia tax rates are easy to find online. The rest of this information is common to any non-US/UK resident investor (as long as you're not a US person).
I believe that tax will be withheld (at 30%?) on dividends paid to non-residents. You can claim it back if your country has a tax treaty with the USA, but you will need to file. You probably also need to file a W-series withholding form (eg a W9-BEN).
Interesting question. I would like to hear a more definitive answer.