Guide to Tax Clearance In Malaysia for Expatriates and Locals

If you want your last month's salary to be credited to your account and not be withheld by the Inland Revenue Office, then read these guidelines on how to make tax clearance in Malaysia for expatriates and local Malaysians.

What is a Tax Clearance?

A tax clearance is a certificate or letter from Malaysian Inland Revenue (LHDN) that says that you either do or don't owe income tax.

Upon getting this letter, your employer will release the balance of any money withheld from you after you settle the outstanding taxes as shown in the tax clearance letter/certificate. This money is your salary, overtime payment, gratuity or compensation due to you.

The Tax Clearance Letter or Certificate (Surat Penyelesaian Cukai, SPC) applies to both Malaysians and expatriates or foreign Workers.

Who Needs to Apply for Tax Clearance?

You need to apply for a Tax Clearance if you are retiring, leaving employment at the end of a contract, resigning, terminated from your employment, or leaving Malaysia for a period exceeding three months. When a taxpayer dies, their next of kin needs to apply.

When to Apply for Tax Clearance?

For LHDN to expedite the issuance of the Tax Clearance Letter, you must apply 30 days BEFORE the expiration of your work contract, your date of resignation or termination of employment, or the date of your departure from Malaysia.

In the case of death, the next of kin must submit the application within 30 days after the date of death.

How to Apply for a Tax Clearance?

To apply for a Tax Clearance, get your employer (usually the HR department) to complete one of the following forms:

  • Form CP21 (if you are leaving the country)
  • Form CP22A (for retirement, resignation or termination of employment if you work in the private sector)
  • Form CP22B (for retirement, resignation or termination of employment if you work in the public sector).

In the case of death, the beneficiary of the deceased taxpayer must inform the taxpayer's employer; then make sure the employer informs LHDN immediately of the death.

The submission can be done online through e-SPC (by the employer only) or manually through the LDHN office that handles your income tax file.

To expedite the issuance of the Tax Clearance Letter, make sure you submit the latest income tax return form. This will update the current status of your tax assessment.

What to Do if You Leave, Resign or Retire Before the Income Tax Return Due Date

If you are eligible for the Monthly Tax Deduction (MTD), and you leave the country, retire or resign before 30th April (Income Tax Return Due Date), then you are not required to submit the income tax return.

For example, if you leave, retire or resign in November 2016, then you don't have to submit a 2016 income tax return (which would be due for submission end of April 2017).

But if the date of departure, resignation, or termination is in 2017, say on 31st March 2017, then you must submit your 2016 income tax return (to be submitted before 30th April 2017). This is to declare your income for the period 1st January 2017 up to 31st March 2017.

If You Are Not Eligible for MTD

If you are NOT eligible for the monthly tax deduction (MTD), then you have to submit your income tax returns for the prior years AND the current year of your departure, resignation or retirement.

What If Your Application for Tax Clearance is Delayed?

Delay in submitting the application for tax clearance may be subject to penalty. Even though LDHN will take the employer to task, it is also your responsibility to ensure this does not happen. And by doing so, you get monies due to you as soon as possible.

So, what is the penalty?

The penalty will be in the form of fines between MYR 200 and MYR 20,000 and imprisonment for up to six months.

LHDN might take legal action against an employer who fails to pay the outstanding tax as per the Tax Clearance Letter. So this is no laughing matter.

How Soon will LHDN Process My Application?

If you submit all the required documents and there are no further queries, LHDN will process and issue the Tax Clearance Letter within ten working days.

Do You Need to Close Your Tax File?

If you are leaving the country for good or are retiring and will not be receiving any future taxable income then you should close your tax file.

Apply in writing to the LDHN office that handles your file (provided there are no outstanding monies due to LHDN) and ask for your tax file to be closed.

If You Are An Expatriate or Leaving the Country

Additional Income After Your Departure Date

If you are entitled to bonus payments or any additional salary after your departure date, you are required to declare this income, which may be taxable.

Cancellation of Employment Pass

Your employment pass or professional visit pass must be canceled before you leave the country.

Submit your application (done by your employer) to cancel the pass within one month of your departure date.

Do You Have Any Comment?

If you have any comment to make on this guide to tax clearance In Malaysia, or you want to share your experience on tax clearance, let me know in the comments below.


© 2016 Mazlan

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greatstuff profile image

greatstuff 3 weeks ago from Malaysia Author

Hi Andrew

Appreciate if you check out my other article on Tax for Expat in Malaysia. The link is

You will find your answers there. If you are still not clear, do let me know. TQ

greatstuff profile image

greatstuff 3 weeks ago from Malaysia Author

Jeff, answers to your questions as follows:

Q1. Apply 30 days BEFORE the end of your contract, yes 15th Oct 2016. This is done by your employer but you have to tell them of your intention not to continue.

Q2&3. The tax clearance letter (TCL) will tell your employer if there are any outstanding amount due or none, and your employer will then release your last month salary or other bonus etc. as per your contract if any. TCL will be issued within 10 working days if all documents are in order. If there are any surplus tax amount paid, it will be credited to your registered bank account (as per your tax submission form) within a month. But if you want them to credit to your bank account in YOUR HOME COUNTRY, you have to visit LHD office that handles your file. Give the bank particulars. The money will be TT to the foreign bank and cost of TT will be deducted from the money due to you.

Jeff 3 weeks ago

Hi Author,

I'm foreign worker in KL. I started working since November last year (2015). Since November 2015 to May 2016, my salary was deducted by 28%, after May, the deduction is lesser (maybe because my status is resident). My contract will end on November 15,2016. I don't want to extend or find another job in KL, just wanna go back to hometown.


1. According to your article, I shall start proceed tax clearance from October 15, 2016. Am I right?

2. How to get back my 28% and monthly tax deduction? Is it from Tax Clearance? I imagined "Tax Clearance Letter" is like a document that stated, Jeff you will get back certain amount from your taxes. Can I say like that?

3. How long does it take for LHDN to credit my Tax into my bank account? Since Im planning to go back hometown by the end of November. Can I say, few days after I received "Tax clearance Letter"?

Appreciate you help, Author.

Really appreciate your help

Anh Quan Chu 3 weeks ago

Hello Greatstuff,

It's great that I've found your article. Could you give some advice on my current case below: I'm currently working in Malaysia for a Malaysian company through a recruitment agency

- My contract duration is one year, starts from end of August 2016, finishes in end of August 2017

- My working visa will be completed in September 2016

- My gross monthly salary is fixed and ranges Rm 3,000-4,000

- Taxation paying is on my account as written in contract

Could you clarify the specific taxation I would have to pay for the whole of my contractual period?

I've known that due to MTD(?) I'll be charged a 28% tax rate per month used for non-residentals in Malay, for first 6 months of my working period. But from now its only 4 months left till end of Malaysia's fiscal year, the agency informed me that the this charge will not be due after 2016 and be refreshed to complete the 6 months, which means the 28% rate will continue till end of June 2017. 10-11 months of my contract.

They also said that the overcharged was claimable but did not state clearly when, how to or how much to claim. I think I would do tax clearance and get the claim in April 2017.

Could you give a quick analysis on this to see if all info is correct and suggest me possible way to mininise my losses from tax?

Look forward to your comments at earliest!

Kindly keep in touch and I will keep you posted for future queries.



greatstuff profile image

greatstuff 2 months ago from Malaysia Author

Hi, teaches12345. Yes, and I hope they find the info useful.

teaches12345 2 months ago

Good information on this topic. I'm not an expert on taxes but I'm sure there are those out there in Malaysia that will value this advice.

greatstuff profile image

greatstuff 2 months ago from Malaysia Author

Hi JK. Happy to hear that you had your issue sorted out. Thanks for letting me know this. All the best to you JK.

JK 2 months ago

Hi greatstuff!

Yes, I filed it online.

Thank you very much for your response.

Will settle the difference to the tax office.



greatstuff profile image

greatstuff 2 months ago from Malaysia Author

Hi JK.

1. If you are under the MTD and combined with your withheld last month's salary, and there are enough cash to pay for any tax due, then it should be OK.

But since you were informed to remit additional RM for 2014, then there are tax amount owing from you.

2. When you filed in your 2014, it should state the amount either overpaid by you (from your MTD) or insufficient and you need to pay the difference. It will not show in your 2015 filing for the amount still outstanding from your 2014 filing. Pls check your 2014 submission. I presumed you did this online?

JK 2 months ago


1. What if I already left the country before my Income Tax gets cleared. Will I be subjected to any penalties?

I submitted all necessary documents for my Income Tax Clearance before leaving Malaysia however few weeks after leaving the country, I was told that I had to remit several ringgits for the year 2014.

2. If that's the case, when I filed my Income Tax Return last year, March 2015, howcome this "debt" didn't came up?

Hope to hear from you soon.


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    Mazlan (greatstuff)452 Followers
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    Born & raised in Malaysia, Mazlan is proud of his Malaysian & Asian heritage & likes to share its mysteries, cultures & current issues

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