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Guide to Tax Clearance In Malaysia for Expatriates and Locals

Updated on September 27, 2016
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Born & raised in Malaysia, Mazlan is proud of his Malaysian & Asian heritage & likes to share its mysteries, cultures & current issues

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.

Cheers.

© 2016 Mazlan

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    • profile image

      vishnukk 8 days ago

      Hi Mazlan,

      I am in malaysia since Oct 2016, I have not made any travel in 2016. can i travel out of malaysia on social visit not exceeding 14 days within the period from 1st Jan 17 to 30 June 17 and 1 July 17 to 31 Dec 17 ?

      will I be still considered resident for 2016 and 2017?

      Also, Can i make the same travel plan in 2018, I mean travel out of malaysia on social visit not exceeding 14 days within the period from 1st Jan 18 to 30 June 18 and 1 July 18 to 31 Dec 18?

      Kindly let us know this earliest so that we can make our travel plan accordingly.

    • profile image

      Vishnu 8 days ago

      Hi Mazlan,

      I am in malaysia since Oct 2016, I have not made any travel in 2016. can i travel out of malaysia on social visit not exceeding 14 days within the period from 1st Jan 17 to 30 June 17 and 1 July 17 to 31 Dec 17 ? will I be still considered resident for 2016 and 2017?

      Also, Can i make the same travel plan in 2018, I mean travel out of malaysia on social visit not exceeding 14 days within the period from 1st Jan 18 to 30 June 18 and 1 July 18 to 31 Dec 18?

      Kindly confirm this so that I can make my travel plan accordingly.

    • greatstuff profile image
      Author

      Mazlan 9 days ago from Malaysia

      Hi, Cherrr. Thanks for sharing your experience in your application for Tax Clearance and your advice on what documents to bring etc. I am sure the readers will find these useful.

      Thank you once again and wish you the best in your future endeavors.

    • profile image

      Cherrr 9 days ago

      Hi Mazlan & All,

      Please allow me to share my experience on this.

      My contract will end on early of May 2017 (of course not enough 182 days for this year).

      I went to LHDN to do Tax Clearance this morning. Advisable to do the tax clearance around 30-40 days before last day of contract, as they will need to process it & sometimes will take up to 10 working days for LHDN to come up with the official letter.

      As for EP cancellation, advisable 30 days before last day (will be done by employer).

      Here are the documents for doing Tax Clearance:

      - CP 21 form (from employer) (LHDN will take original copy)

      - 1 photocopy of all pages passport

      - Bring original passport

      - Complete 2016 e-filing

      - EA form & supporting documents (receipts for tax deduction that we filled in during the e-filing) from the year employed under the current employer.

      - travelling schedule (when is the date in & out Msia) during the employment with current employer.

      Their calculation for this few months tax, roughly will be referring to last year (2016 July-Dec) whether we fulfill the 182 days and 14 days out of Msia rules.

      In my case, on 2016 Jun I did flew out from Msia for personal purpose, let say 26 Jun I flew back Msia, so they calculate from 26 Jun-31 Dec 2016. In between I did flew out from Msia 2 times, 1 time for personal purpose & 1 time for business trip, totaling 6 days. As long as did not exceed 14 days, and fulfilling 182 days (after deducting the 6 days) then the business trip will be consider as personal.

      If the total out from Msia exceeding 14 days, the business trip will be deducted out (need the proof of documents eg. letter from employer). And after the deduction for business trip, the total number still will have to not exceeding 14 days.

      If the above rules are fulfilled (182 days from July-Dec 2016 & not exceeding 14 days), then this year tax (few months of 2017) will be considered as Resident.

      If the above rules is not fulfilled, then 28% tax will be imposed for these few months of 2017.

      So I will have to wait for the letter that LHDN will send to me regarding my Tax Clearance.

      And in addition, this is how they calculate days out of Msia.

      Eg:

      1 March - fly out from Msia

      5 March - fly back to Msia

      = so the number of days out of Msia is 3 days (2,3 & 4 March). 1 & 5 March is consider in Msia.

      As for me, my tax file is located at LHDN Jalan Duta. (location of tax file may vary, best is to call LHDN to find out if you do not know where is your tax file located at).

      The office location for Tax Clearance counter at LHDN Jalan Duta is at Block 8 (main entrance, the building with CIMB bank) Level 9 (left hand-side after coming out from lift).

      Hope this info is useful for expat friends out there in Malaysia.

    • profile image

      Prateek 11 days ago

      Hi Mazlan,

      very informative article . I have one query if you can help me with that . I am a foreigner and tax resident in malaysia(greater than 182 days/year) from last 5 years . My contract is ending on 31st March 2017 , in 2017 I was out of Malaysia (10th Jan 2017- 8th Feb 2017 ) ..so if I calculate I will be in Malaysia for 60 days only in 2017 ...I read that if you stay less than 61 days in a year you dont need to pay tax ...so in this situation do I need to pay tax as I was tax resident from last 5 years or I can get exemption as I am only for 60 days in current year ?

    • greatstuff profile image
      Author

      Mazlan 11 days ago from Malaysia

      Nor Shah Alam. your tax agent should be able to advise you on this matter. However, I don't understand why it takes your agent 2 months to clear your tax clearance

    • profile image

      Nor Shah Alam 2 weeks ago

      If an expatriate has been terminated and gets severance of about 10 months of his salary, can he request from the company to release some amount - eg. 2 months salary as he has to go back to his country without any income and request not to withhold 100% of his last drawn including his severance? We are doing it through a tax agent and it takes about 2 months for tax clearance. Thanks.

    • profile image

      Angela 2 weeks ago

      Hi Mazlan,

      I have a question. My husband is an expat working in KL hired July 2016, tax is being deducted as a non resident as he is not yet staying for more than 182 days for 2016, so tax deduction per month is around 25-28% which is fine.

      My husband tendered his resignation this Feb 28, 2017 and still have 1 month notice, end date with company is March 31, 2017. So until Feb salary he is still being deducted with his tax which is fine.

      My question is now their HR came back saying he still need to pay the tax for January 2016-June2016...which is absurd since my husband is not yet working in KL and not even with their company during those months? According to them its the law. I just want to confirm if they are telling the truth? As I cannot find it in the website.

      Please help us understand.

      Thanks,

      Angela

    • greatstuff profile image
      Author

      Mazlan 3 weeks ago from Malaysia

      Vishal, from 7th Sept

    • profile image

      PS 3 weeks ago

      Hi Mazlan,

      I'm a malaysian and currently working overseas. I left Malaysia in Nov'2016 however did not perform tax clearance. My Company perform MTD to my monthly salary and read articles that I can actually declare 2016 income in the 2017 tax filing. Is this right and no implications. Thank you.

    • profile image

      saurabh 3 weeks ago

      Hello, I started working 14th may 2016 and will be flying for 3 weeks after 14th may 2017, will come back again in june 2017. How do i get refund of tax which is deducted in all these months @ 28% (non-resident)?

    • vshalprasad profile image

      vshalprasad 3 weeks ago

      Hi Mazlan,

      I started work on 7th Sept 2016 in Kuala Lumpur and haven't taken any vacation yet, also staying here on 31 dec and 1 jan. Now I plan to resign and leave Malaysia by breaking my contract. For tax purpose, to be considered as a resident for my entire stay in Malaysia, do I need to stay here till 8th March 2017 (182 days from 7th Sept 2016) or till 1st July 2017 (182 days from 1st Jan 2017)? A quick reply from you would greatly help me plan my exit dates. Thank you in advance.

      Regards

      Vishal

    • profile image

      mean 4 weeks ago

      hello! can i have an image of legit non resident tax certificate in malaysia issued by lhdn

      thanks

    • greatstuff profile image
      Author

      Mazlan 4 weeks ago from Malaysia

      Cherrr, your stay is continuous and hence you are still under Resident for 2017, even if your contract ends in April 2017.

    • greatstuff profile image
      Author

      Mazlan 4 weeks ago from Malaysia

      Ken. Is your Singapore owned company based in Malaysia? If you are employed by this Malaysian based company and your office is in Malaysia, then your tax is paid as per LHDN. It doesn't matter if you are out of the country for 300 days or more. All income must be declared.

    • profile image

      Cherrr 4 weeks ago

      Hi Mazlan, thanks for the useful write-up. I would like to ask a few questions.

      I'm working in Malaysia since June 2015 and my last day will be end of April 2017.

      2015 tax - done in 2016 (fulfilled 182 days)

      2016 tax - coming submission 2017

      For this year (2017) i will be working for 4 months (Jan-Apr), so how does the tax calculation? is it for this 4 months will be calculated as Non-Resident?

      Please help and thanks in advance.

    • profile image

      Ken 4 weeks ago

      Hi all,

      I am not sure if this is the appropriate place but any advice will be appreciated. I am a Malaysian and reside in Malaysia.

      Currently I am working for a Singapore based company. However, the nature of my job requires me to travel outside of Malaysia and Singapore for over 300 days a year. Since I do not work in Malaysia, I am exempted to pay tax right?

      The funny thing is, I do not work in Singapore either. So I am not required to pay there too. I just started working so I have no idea about all these borangssss.

      Please advice or share your experiences thank you!

    • greatstuff profile image
      Author

      Mazlan 4 weeks ago from Malaysia

      Hi, Jenneth. Unfortunately, I can't help you on business tax. Either you get a tax consultant to help you or go personally to LHDN and get their advice. (which is cheaper!)

    • profile image

      Jenneth 4 weeks ago

      Hello,

      I would like to ask for your point of view,

      i have business (sole proprietor) and previously every year i do have to pay tax. Now, my business sales are decreasing and i would like to close my business in near future.

      Starting this year 2017, there are no more sales in my company.

      Do i have to pay tax again? and i would like to inform LHDN regarding this matter so that i don't have to pay the tax anymore. How is the procedure?

      please help and thanks in advance

    • profile image

      Meli 4 weeks ago

      Hi Mazlan,

      I need your point of view in my case.

      I started working since Sept 26th 2016, I entered Malaysia Sept 25th. My contract would be a year until Oct 2017.

      But I am planing to terminate/ resign and leave Malaysia.

      I plan to do my tax clearance on Mar 28th.

      Based on my counting, the total of my stay would 185days but I was out of the country for 12 days (break it into 2 different times, december 2016 and jan 2017 but I was in the country on dec 31st and jan 1st). From the beginning until now, my tax still 28%. My question is,

      1. Is it possible to get my the 28% of my taxes back? Since I stayed for 182 days (include my fly out)

      2. When should I start to tell my HR? Because I read the tax clearance form should be filled less than a month of my departure date. I'm planning to leave the country on April 1st.

      Please help.

    • greatstuff profile image
      Author

      Mazlan 5 weeks ago from Malaysia

      Prince0104, most of your questions are already answered in the article. On tax matters pls see my article on Tax here: https://toughnickel.com/personal-finance/Quick-Gui...

      On EPF, go to EPF office and apply for withdrawal.

    • profile image

      Prince0104 5 weeks ago

      Hi Mazlan,

      Good Morning. I am working in Malaysia since last 2 years and my work permit is due for expiry in April 2017. Due to personal reason, I am not interested in WP renewal and want to leave the country exactly on the WP expiry date or a week advance (by adjusting my Annual leaves)

      Few Queries

      1) Do I or my employer need to cancel my WP (even though it's going to expire on 30th April) ?

      2) Tax clearance cert : Who should apply for this ? Me or my Employer ? What the relevant document we should submit to LHDN ? Should we visit to servicing branch or apply online ?

      3) In my case, I am not resigning but leaving the country due to work permit expiry so which form would be applicable CP21 or CP22A ?

      4) I am planning to file my 2016 tax returns by 1st March 2017 and expecting a refund. How about filing tax for 2017 (Jan to Apr 17) and when should i expect tax refund for 2017 ?

      5) Currently for 2017 my employer is deducting my tax based on my resident status. Since i am leaving the country without completing 180 days in 2017, will my tax deduction % or refund will affect/change according to my resident status in 2017 ?

      6) EPF - bit confused on this area. Looking at my WP expiry date, when should I apply for EPF withdrawal process ? Should i request my employer to stop deducting my EPF for next 2 months ? or allow them to continue deduction and contribution until april salary and then i can withdraw all the contribution done by me and employer?

    • profile image

      Nilesh 6 weeks ago

      Thank you so much for you revert. My employer has cancelled the Employment pass and I have visited the LHDN office to expedite the closure and issuance of the Closure Letter. Another question, once I get my EA form if I am not living in Malaysia anymore, will I need to come and declare the income in this year for 2017?

    • greatstuff profile image
      Author

      Mazlan 6 weeks ago from Malaysia

      Nilesh, make sure you also cancel your employment pass. If you decide to work again in Malaysia, it will be easier to get a new work permit. As usual, you need to declare your income once you get the EA form. It is best to go directly to LHDN's office to sort this out.

    • profile image

      Nilesh 6 weeks ago

      I joined on 4th Dec 2016 and have resigned now. My last working day is 18th Feb 2017 and am flying back. I have submitted forms to LHDN manually with the help of my HR and waiting for the letter now. I understand the clearance will be done by my HR through my Full & Final settlement salary. Do I need to do anything else before leaving. Also what is to be done with the EA form which my employer will be sending next month.

    • greatstuff profile image
      Author

      Mazlan 7 weeks ago from Malaysia

      Zubir, your end of contract date don't have to be the same as your flight date. I believe you are allowed to stay a couple of weeks more, depending on which country you are from.

    • profile image

      Zubir 7 weeks ago

      Thanks Mazian,

      Now I have another trouble ,

      Tax clearance successfully issued , So I am going to cancel my EP but I asked HR to let me do this myself . I have DP11 form , authorization letter and a cancellation cover letter stating 5th Feb but I changed my flight ticket to 13th Feb and the HR told me he is not going to issue any more letter for me and that's it!

      I havn't go to immigration counter yet. As i know immigration needs that date to be same as my flight date ! how to proceed now?! Is it possible that immg officer still cancel it for me?

      If not what will happen if i just leave? is there any other option?

      Thanks

    • greatstuff profile image
      Author

      Mazlan 8 weeks ago from Malaysia

      Zubir, I have answered your question but it didn't show up on the website. So I am posting it again.

      As I had mentioned in my reply, technically, once EP is canceled, you cannot work in the country and get paid for it.

    • profile image

      Zubir 2 months ago

      HI,

      My tax clearance already issued , My EP cancellation is in progress and i have my flight ticket two weeks later , and my last employment date passed yesterday.

      Am i legally eligible to received extra salary from the company if i am going to work for this remaining two weeks, considering my last employment date passed and TL issued ?

      Thnkas

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      Dear Farhan, I believe answers to your questions are in the article. TQ

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      Dear WS. I suggest you send them copies of all the particulars and tell them that you are currently working abroad.

      Tell them that once you are back (for holiday? and state when that will be) you will see them should there be any further info required etc.)

    • profile image

      Farhan 2 months ago

      Hi Mazlan,

      I'm resigning from my current employer by the end of this week and leaving Malaysia.

      I hope you could kindly answer my questions below.

      - What are the documents that I should bring to the tax office?

      - Would it be possible to get the clearance by submitting the documents online?

      - What would be the chronological order to get this clearance if I have to submit it physically to the Tax Office by my self?

      Many thanks in advance for your answer.

    • profile image

      WS 2 months ago

      Hi Mazlan, looks like I'm in a bit of mess at the moment. So, I'm a Malaysian citizen and have left Malaysia to work overseas. My last day of work was end of April last year, including annual leave. I was not aware that I needed to get the tax clearance letter and my previous employer did not issue me a CP21 form. Fast forward to today, my previous employer said they unable to issue the form has it has been too long since I left. They didn't withhold my last pay and everything (or so I thought) was settled when I left them. LHDN still insists that I need to get the form from them, when I told them they aren't able to issue. Am I able to fill up the form myself, with details from my previous payslips from Jan 2016-May 2016, my last payslip? And then see an officer about it when I return? Please advise.

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      Hi, SL. I am not an expert in the foreign workers/immigration matter, so I am not able to answer your questions. But my gut feel is, no. I suggest you go and see the relevant immigration dept with regards to this matter.

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      You need to inform them that you will be leaving the country and it is best to also fill in CP21. You have to declare your yearly total rental in your yearly tax submission. This income must be after less your related expenses (property agent fee, yearly assessment and quit rent, repair, and maintenance etc.)

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      Jo, not sure if I am able to answer this for you. Best thing to do is to go to your LHDN office that handles your tax file. Explain to them your situation and get their advice.Hope this helps.

    • profile image

      SL 2 months ago

      Dear Mazlan,

      Found your article very helpful and useful. I have a few questions here. Hope you can enlighten me.

      a) I had an employee who left the country without doing tax clearance and work permit calcellation. And I had checked with the authority department, work permit cancellation can be done without the employee surrender the passport. We can proceed to make police report in order to protect the company from any wrong doing from the employee wrong doing. Then, submit the police report and relevant documents to the authority department.

      My question is, by doing so, will that affect our work permit application for expatriate for the future ?

      b) Can we just let the work permit expire automatically ?Any unforseen risk to the company ?

      Understand that I am not asking question relating with tax clearance. If you have the answers for the questions above, I would like to hear from you.

      b)

    • profile image

      Johnny 2 months ago

      I am Malaysian and will be migrating overseas in Feb 2017. I am currently employed and my last day with the company is 10 days before I fly. My company does not do PCB. After I leave M'sia, I will continue to receive rental income. Apart from the CP22A, do I also have to do CP21?

    • profile image

      Jo 2 months ago

      Hi Greatstuff,

      My case might a be a bit different, I hope you can advise me on this

      I have been working in Malaysia for 2 years and 9 months from the same company. I received a backdated redundancy letter, which force me to take action against the company. I was not given a month notice, neither a payment in lieu. At the moment, I am waiting to hear from a lawyer regarding this matter but I was wondering how will the process of my tax clearance be? Will I get a tax refund as well?

      I hope you can advise me on this. Thanks!

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      GKW, go to the LHDN office that handles your tax file and get them to revise the MTD accordingly.

    • profile image

      GKW 2 months ago

      If my malaysian income tax account has credit, can i offset from my account and not deducting from my monthly salary ? If can, what is the procedure ?

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      Prakhar, how did you get the tax clearance without getting the letter? A TCL must be issued and it is probably with your employer. Check with them for a copy of this letter. What was the mailing address you registered with LHDN? A copy could have been posted to this address. Alternatively, write to LHDN that handles your tax file and write for a copy of TCL. Give as much detail as possible when you write to LHDN.

      have left Malaysia for more than 2 years. Is there a reason why you now need the tax clearance letter?

    • profile image

      Prakhar Agarwal 3 months ago

      Hi,

      I got tax clearance but never got the tax clearance letter. I do not stay in Malaysia and it has been 2 years already since I left Malaysia. What shall I do to get it?

      Thanks

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Ayush, the yearly tax return must be submitted by end April of the following year. Any excess tax paid will be paid back in the following month i.e. May. Hence your income for 2016 (up to end Dec 2016) must be filed before end April 2017. Any refund will be done in May 2017.

    • profile image

      Ayush 3 months ago

      When i can claim back my taxes paid due to non residential status? I started in August 2016 so by feb 2017 i will be resident. Please let me know when can i get my excess taxes back?

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      AC, you might have a problem to get a new work permit and even encounter travel restrictions.

      You don't get tax clearance, you will not get your last money salary or any other monies due to you.

    • profile image

      Rinie 3 months ago

      Hi Mazlan,

      Is there any email address to contact to with regard the TCL?

      Have explored the website of IRB and also called but couldn't find it.

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Rinie, as mentioned in my reply, pls attach a covering letter to explain why you had to leave earlier and forgot to file your tax return.

      On the form that was not signed, maybe because the form is still incomplete. Fill it up and send it back to your employer.

    • profile image

      Rinie 3 months ago

      Thanks Mazlan for your prompt reply,

      The CP21 form they sent to me is already filled up by them include the number figures, but only few item is still empty such as, departure reason, address outside malaysia, and the form is not yet signed off by them. Is that valid?

      And anyway, is it Ok to apply the TCL now, since you mentioned in the article must be 30 days before the expiration of contract?

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Hi, Rinie. Yes, you need to fill in the attached forms as sent by your HR officer. Send it back to both LHDN and to your company's HR. Also, attach a letter to LHDN (copy to HR) to explain your situation (left the country for health reason etc)

    • profile image

      Rinie 3 months ago

      Hi Mazlan (Greatstuff),

      Thanks for your article, it's very useful!

      My contract was ended on last November 2016 and not extended, but I have left the country due to an important health recovery.

      Then I got an email from HR just recently saying that I need to do the tax clearance before they could release the last salary. They attached the filled CP21 form (but not signed yet), EA And PCB.

      Please your further assistant as I'm in hometown already and not possible for me to go to LHDN for the tax clearance.

      My work permit is still valid however until next year and have not cancelled it.

      Thanks,

      Rinie

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Hi, yochen. The purpose of the tax clearance is to inform your company (A) of any outstanding tax payment before your company A can pay your last month salary. If you don't have this TCL, your last month salary might be delayed.

    • profile image

      yochen 3 months ago

      Hi, A bit late to comment. But I hope you can help to answer some of my questions.

      - What if the case is change of employment, if I were resigning of company A and will be employed by company B in less than 1 month after my resignation date. Do I still need to do tax clearance?

    • greatstuff profile image
      Author

      Mazlan 4 months ago from Malaysia

      Jo, any excess tax payment will be paid back in May (all tax return to be submitted by end April)

    • profile image

      Jo 4 months ago

      Hi, Good Day to all, just wondering, I worked in malaysia for 1 and 9 Months then I resigned and left the country on October 5th 2016, I've already submitted and got the tax clearance document

      question is if I have an excess tax payment, when or can I still receive it?

    • greatstuff profile image
      Author

      Mazlan 4 months ago from Malaysia

      Hi, Miss O

      You are required to submit your tax clearance 30 days before your departure date and if you have MTD, then you don't have to submit your tax return for 2016 since you will be leaving in Jan 2017. Any bonus paid in April 2017 for your services in 2016 will be declared on the 2017 tax return.

      Your notice period is three months and I don't see any reasons why your HR will not offset your AL. (Unless you have accumulated a lot of days). Some companies will pay you in cash for the annual leave that they don't allow to be offset.

      On your bonus payment, why don't you ask if they can pay them in your last month salary since you will be migrating? I am sure they will reconsider your case.

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      Miss O 4 months ago

      Hi Mazlan,

      This article is very informative and helpful. Thanks for sharing! I have questions need your advice please:

      I'm a Malaysian, migrating to US for good.

      I resigned on 3Oct 2016, my last working day is 3Jan2017. I have 18days of AL & 4days of RL. According to HR I can't use my AL to offset my notice period(3months) due to tax clearance concerns.

      If I use my leaves to offset notice period then my last physical day would be 28Nov and I won't be entitied for bonus because HR said I can't have income after 28 nov, I should declare tax before this date. I can't be a company employee (receive salary) after 28 nov.

      *my company policy: an employee entitled to bonus if he/she still an employee on 31 dec (included serving notice). My company giving bonus on April every year.

      HR advised me to serve full 3months notice I.e until 26Dec (offset 4RL) and I will be entitled bonus next year April 2017.

      They ask me to declare tax before 26 dec, and they will give me payroll on 26 dec.

      However, they will pay me my allowance on January 2017 and pay my bonus in April 2017.

      So do I need to declare tax for 2017 later?

      I wish to leave the country asap to reunite with my husband as we hv had enough of LDR. I wish I could offset my AL and get my bonus. Could you please advise me? Thanks a lot!

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      Author

      Mazlan 4 months ago from Malaysia

      Pankaj, no problem. Is there anything else I can help you with?

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      Pankaj 4 months ago

      Thanks Mazlan for your time and reply.

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      Author

      Mazlan 4 months ago from Malaysia

      Hi, Pankaj. Work visa and Visit Visa are two different type of visas. You cannot come in under visit visa and work in the country nor use that to add into your previous (expired?) work visa length of stay.

      2. I am not sure if you can do that. I suggest you go to the LHDN office that handles your file and explain to them in person of your reasons.

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      Pankaj 4 months ago

      Hi Mazlan,

      Thanks for informative article.

      I was staying in Malaysia till June 16 since last year. My 2016 tax status is non resident due to shorter stay from 182 days. My two questions are :

      1. Can I plan to visit Malaysia on visitor visa before December and complete number of days to claim tax residency.

      2. Can I file revised return for 2016 to get tax refund. I already submitted return as non resident to get tax clearance and my final settlements from Employer.

      Thanks

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      Author

      Mazlan 5 months ago from Malaysia

      Hi Andrew

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

      https://toughnickel.com/personal-finance/Quick-Gui...

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

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      Author

      Mazlan 5 months ago from Malaysia

      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.

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      Jeff 6 months 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.

      Question:

      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

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      Anh Quan Chu 6 months 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.

      Regards,

      Andrew.

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      Author

      Mazlan 7 months ago from Malaysia

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

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      teaches12345 7 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.

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      Author

      Mazlan 7 months ago from Malaysia

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

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      JK 7 months ago

      Hi greatstuff!

      Yes, I filed it online.

      Thank you very much for your response.

      Will settle the difference to the tax office.

      Regards,

      JK

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      Author

      Mazlan 7 months ago from Malaysia

      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?

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      JK 7 months ago

      Hi!

      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.

      JK

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