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Malaysian Tax Issues for Expatriates and Non-Residents

Updated on August 11, 2017
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Born & raised in Malaysia, Mazlan is proud of his Malaysian & Asian heritage & likes to share its mysteries, cultures & current issues.

Are you looking for a job in Malaysia, considering an expat assignment in the country or already working here, but is still confused on the country’s tax structure?

Then this article will try to explain the various tax issues and help you understand it better.

1. What is Malaysian Tax Rate for Expatriate & Non-Residents?

The current tax structures for expatriates and non-residents are as follows:

  • If your stay in Malaysia is less than 60 days, then any income, fee, commissions or bonus received will not be taxed
  • If during your period of employment, your stay is not more than 182 days in a year, then you are a non-resident. As a non-resident, you will be taxed at a flat rate of 25% and you will not enjoy any tax incentives. UPDATE: LHDN had increased the tax to 28% with effect from Year Assessment 2016
  • If your stay is more than 182 days in a year, then you are a RESIDENT (see below for definition of a RESIDENT). A resident will be taxed at a graduated rate of 0% to 25% depending on your income. You will also enjoy the tax incentives that includes personal and family rebates, allowances, etc. that will reduce your net taxable income considerably
  • If you work on board a Malaysian ship, your income is not taxable

Definition of a Resident

You will fall under the category of RESIDENT if you meet one of the following criteria;

  • You are in Malaysia for at least 182 days during the calendar year
  • If your stay is less than 182 days for that calendar year (e.g. 20 days in 2015) but your stay continues in 2016 for another 182 days or more

What if I Have to Travel OUT of Malaysia within this 182-day period?

If you have to be physically away from Malaysia for the following reasons:

  • To attend meetings, seminars, exhibitions or conferences which are all related to your job
  • To seek medical treatment related to your health or your immediate family member
  • Social visit but not exceeding 14 days

then this brief absence shall be considered as part of your required 182-day.

2. How to Get Your Income Tax Number

Usually, your company will arrange this for you. If this is not the case, then go to the nearest Inland Revenue Board of Malaysia's office or known locally as Lembaga Hasil Dalam Negeri, to register and get your income tax number. You need to bring your passport with you.

Please do this within two months of your arrival into the country.

3. When to File Your Tax Return

The last day to submit your Malaysian tax return is 30th April each year. But do not wait until this very last day as the Inland Revenue Board of Malaysia's (IRBM) office will be packed with last minute submission and you are bound to be stuck there for hours.

This also applies if you file online.

Filing of Malaysian tax return can either be online (e-Filing) or manual filing.

If you prefer manual filing, then go to the nearest IRBM office and get the following form that applies to you:

  • Form B, for individual who carries on business in Malaysia. In most cases this may not be applicable to you if you are employed by a company OR
  • Form BT for individual who is classified as a knowledge worker or expert worker and approved by the Minister OR
  • Form BE for individual who does not carry on business and is employed by a company
  • Form M if you are a non-resident

Fill in the form and submit before 30th April for each year.

For e-Filing, you must first be registered as an online user. To register, you can email them at pin@hasil.gov.my and attach a scanned copy of your passport. Alternatively, you can go to the nearest IRBM's office to register. This is a one-time process and you do not need to register again for your next assessment year. Just do not lose your username and password.

Supporting Documents

For both manual and e-filing, you do not need to submit your supporting documents. However, you must keep it for at least seven years as within this period IRBM has the right to check and audit your submission.

Before you can fill in the manual or e-file form, you need information from your company on the total remuneration paid to you during that assessment year. This EA form is issued by the end of February each year and you will use the information as given out in that form, when filing your tax return.

If you love the outdoors, you will love Malaysia
If you love the outdoors, you will love Malaysia | Source

4. Documents to Keep for Record Keeping

The followings are supporting documents that you must keep for at least seven years (from the end of the assessment year) for any possible audit by IRBM:

  • Your EA Form
  • Original receipts for books purchased, medical bills, donations that you had made to approved bodies or funds*, insurance premiums, zakat receipts (for Muslims), and dividend vouchers
  • Your marriage certificate and your children's birth certificates
  • Any other supporting documents such as your letter of appointment from the company that employed you

* as approved by the Director General of IRBM.

Malaysian Tax Guide

Malaysia tax year is the calendar year.

Tax in Malaysia is based on the self-assessment regime. Your income is deducted by your employer under the pay-as-you-earn scheme, and then remitted to IRBM on a monthly basis.

5. Is There a Penalty for Late Submission?

A penalty is levied for any delay in submitting your Malaysian tax return forms.

As mentioned earlier, all submissions must be on or before 30th April for each year.

6. How Do I Calculate My Tax if I Worked for only 1.5 years

Income received during your first 182 days will be taxed based on a non-resident flat rate of 25%. From 183rd day onward, the tax rate will vary. It will be based on the tax table as provided below.

Since your contract is more than a year, you will be filing your tax return twice, e.g. assessment year 2014 and 2015. Your assessment year 2015 will be calculated based on the resident tax rate and the non-resident flat rate of 25% will no longer be applicable.

Resident Individuals Income Tax Rate

Chargeable Income
Tax Rate for 2013 and 2014
Reduced Tax Rate for 2015 onwards
From RM1 to RM5,000
0%
0%
From RM5,001- RM20,000
2%
1%
From RM20,001- RM35,000
6%
5%
From RM35,001- RM50,000
11%
10%
From RM50,001- RM70,000
19%
16%
From RM70,001- RM100,000
24%
21%
From RM100,001- RM250,000
26%
24%
From RM250,001- RM400,000
26%
24.5%
From RM400,001 and above
26%
25%
Exchange rate RM3.2 = US$1

7. Can I Get Any Tax Relief for My Family?

If you have family staying with you in Malaysia and you are considered a resident, i.e. stayed more than 182 days in a year, then you will be entitled to several tax exemptions. Please refer to IRBM Explanatory Notes for this list of tax exemptions.

8. Can I Get Tax Rebates at the End of My Contract?

Unfortunately, there are no special tax rebates at the end of your contract period.

Any tax incentives and rebates are already provided for (follow the link provided above to see these rebates) and are the same as when you do your yearly tax return.

Before leaving Malaysia at the end of your contract, don't forget to get your tax clearance from Income-Tax Office, LHDN.

9. Will I be Subject to Withholding Tax?

Non-residents will be subject to withholding tax only on the following types of income derived in Malaysia.

Type of Income
Rate
Use of movable property
10%
Technical services, assistance or advice
10%
Fees charged for installation of machinery, plant & other similar assets
10%
Personal services for use of intangible property
10%
Royalties on the use of intangible property
10%
Interest
15%

10. Is the Reduced 15% Tax Rate Applicable to me as a Foreigner if I Work in ISDR?

Both Malaysian and foreign national that are categorized as “knowledge worker” will enjoy the reduced tax rate of 15% if you resides and work in the Iskandar Development Region.

Definition of “knowledge worker” is working in certain qualifying activity with a designated company. Your employment must start on or after October 24, 2009, but before December 31, 2015.

You must not receive any Malaysian employment income for at least three years prior to the date of this reduced tax application.

Property in Malaysia is still the cheapest in the region
Property in Malaysia is still the cheapest in the region | Source

11. Will I be Subject to Capital Gains Tax?

The answer is no.

However, if you bought and sold real property in Malaysia, any gains received from this disposal is subject to real property gains tax or RPGT.

Any disposal made within the first three years, is subject to 30% RPGT. For sales made in third, fourth and fifth year will be charged at 30%, 20% and 15% rate respectively.

No RPGT for any disposals made after the fifth year.

An update on purchase of Malaysian properties by foreigners; the current minimum price of RM500,000 will be increased to RM1m. However, at the time of this writing, this new ruling is not enforced yet as it has yet to be gazetted.

The Malaysian Tax Rate is One of the Lowest in the Region

The current maximum tax rate of 26% for personal income is the second lowest in the region. This rate will be reduced further to 25% from assessment year 2015 onward.

An expatriate who has gained resident status will enjoy tax rebates and other incentives. Their effective tax rate can hence go down to 21%.

12. If I Work for Foreign Companies in Malaysia whose Office is Classified as Operational Headquarters, how will I be Taxed?

You will be taxed only on your chargeable income earned during your stay in Malaysia.

13. What is the Tax Rate for a Foreign Public Entertainer?

Currently it is a flat rate of 15%, provided your stay is less than 182 days.

14. How Do I Claim for Refund of Excess Tax Payment Made through the Monthly Tax Deductions?

You do not have to apply or request for refund as IRBM will process this within 30 working days for e-filing submissions and within 90 days if submissions was posted or hand delivered.

If you do not receive it within this stipulated time frame, there is a possibility that IRBM may want to audit your tax return.

If this is the case, you should have received a letter from them on this matter.

If you have not heard from them, then you should visit the nearest IRBM office for information relating to your tax return.

15. What if I Submit My Tax Return After the Due Date and There's a Refund to be Made by IRBM?

Any late submission of your Malaysian tax return will be fined and once you pay this penalty, any excess tax payment will then be processed for reimbursement.

16. How Do I Know That IRBM had Made the Refund of Excess Tax Payment?

IRBM will credit directly to your bank account that you had registered with them. Unfortunately, there is no notification from IRBM when this transfer happened.

You have to check your bank statement for any 'additional' credits to your bank account, which can be daunting to some people! That is the only way to check otherwise you can call IRBM on when they credited your account.

English is widely spoken by most Malaysians and this is one of the many reasons, why expatriates love to stay in Malaysia
English is widely spoken by most Malaysians and this is one of the many reasons, why expatriates love to stay in Malaysia | Source

Malaysia Tax Guide for the Expatriate

Malaysia's personal tax rate may not be the best.

The current personal tax rate bands are still in need of fine tweaking, so that taxpayers do not reach the maximum income tax rate too quickly,

For Malaysia to stay competitive, it needs to lower the current direct tax rates. The government had earlier announced the reduction to 25% from the current 26% for personal income tax, for assessment year 2015 onward.

Although this is a good move, it is still high compared to neighboring country such as Singapore. I hope that when the country implements the GST, the personal tax rate will be reduced further.

Malaysia is Still a Competitive Country to Work & Live

Despite all these, Malaysia remains an attractive country to work and stay. The slightly higher tax rate is offset by the relatively lower cost of living compared to Singapore.

Hence, effectively you get to spend less and have more.

I hope this article helps clear some of the issues and questions that you, as an expat or would-be expat may have on our country's personal income tax structures. If you need more information on other tax matters or for location and address of IRBM nearest branch office, you can visit the Inland Revenue Board of Malaysia website.

While you are here, don't forget to go out and enjoy your stay here in Malaysia.

RESPONSE TO YOUR QUESTIONS

There are instances where questions posted are already answered/highlighted in the article.

Likewise, a similar question was already posted by other readers and answered.

So effective today, 5th Jan 2017, I will no longer reply/answer to a question if it has has been posted before (and answered) OR the answer is already highlighted in the article.

I will also NOT answer any queries sent through email. Any questions to submit through the comment box below, please.

Thank you for your understanding.

© 2014 Mazlan

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    • greatstuff profile image
      Author

      Mazlan 10 days ago from Malaysia

      Jim, your income is not derived from Malaysia, hence not subject to tax. For more info, you can check this website from the tax department http://www.hasil.org.my/bt_goindex.php?bt_kump=5&a...

    • profile image

      Jim 10 days ago

      I am a US citizen. If my wife is working for an international school in KL, and I continue to work remotely as a developer for my company back in the US, will I be taxed in Malaysia as well for my remote work?

    • profile image

      Irshad914 2 weeks ago

      Hi Mazlan,

      I came from India and joined as a Business Analyst in Malaysia in September 2017 for the pay RM 3500 (Three thousand and five hundred). I would like to know the tax percentage for my pay (RM 3500) as this is my first job in Malaysia. Some people saying not much tax for this pay and some saying 28% even though the pay is less. I am totally confused and searching for right information. Any one please provide the right information.

      Thanks in advance.

    • profile image

      Rahul Gupta 4 weeks ago

      I am working as a developer in Malayasia basically i am from India. My concern is that, i am holding employment pass till 30th Nov but now my contract is going to renew(182 days not completed till now).

      1.) Do i will be considered as resident and tax rate will be according to my salary or it'll be 28%?.

    • profile image

      Ajatshatru Singh 4 weeks ago

      So, I came to Malaysia in July 2017. If I calculate my stay in total here is 187 days. Now, I have travelled abroad for around 8 days now. I am planning a visit India in Dec. Now, I wanted to know how many days of leaves can I take in this year. Is it the remainder 6 days for the 14 day limit or can I take 6 days + 5 days ?

    • profile image

      ali 6 weeks ago

      I am a PHD student and working as a part time in training center my current status is a student pass, I was working before here in Malaysia and I have a file tax no, can I use it again for my current part time job and if can't so how the company treat me as a free lance without affecting my situation and make a trouble with immigration.

      please appreciate if any one can advice

    • profile image

      MartinMalay 7 weeks ago

      Hi, I will start an international assignment in Malaysia soon with working period of more than 183 days / year so I will be tax resident I suppose. My question concerns what counts as taxable income. My company will pay some overheads for housing and local costs. Is this considered taxable income under Malaysian tax law, i.e. will I have to pay income tax on these amounts or just on the salary part?

      Thanks for any information!

    • profile image

      Md 8 weeks ago

      Good day,

      In case, I am going to do tax clearance. Will LHDN keep my passport? And how long the process gonna be finished? And during tax clearance can i flying away around 4-5days.

      Thank you

    • profile image

      Deis 2 months ago

      Hi Mazlan

      I would like to ask few questions

      1. I arrived at Malaysia on 29th June 2017 and while getting the 2nd stage of employment pass, my employer got a special permission from LHDN to let me start work on 5th July 2017..My EP issued on 20th July 2017.. so my 182 days actually started on 29th June (the day I arrived) or 20th July (The day EP issued)?

      2. If 20th July then the total days in Malaysia will be 165 days..If I stay at Malaysia on 31th Dec and 1st Jan (as you suggest in your article) I can continue the count to 2018, but in 2018, I have to accumulate another 182 days or only 18 days in 2018 to make the FY 2017 as resident tax?

      3. If I have to accumulate another 182 days, should it be consecutively (jan to june cannot go out)? or can I have social visit as long as less than 14 days in the middle of 182 days?

      4. Business trips is different with Social visit right? means that business trips is permitted to have more than 14 days?

      Please help me...I have been thinking a lot about this and don't get definite answer about this..

      Many Many Thanks

    • profile image

      Jagadeswara 2 months ago

      Hi Mazlan,

      I have joined the Malaysian company with WP visa on 23rd July 2017. and I will stay in Malaysia till April 2018 with out taking leaves more than 14 days. in 2017, i will stay for 150 days and in 2018 i will stay for 100 days.

      How my tax will be calculated. Please help.

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      Ashishkra, if I am not mistaken, expatriates under the PVP may only apply once and this is for the period not exceeding 12 months. I think you need to apply for EP for your second job.

      Please check with your new employer and the Immigration Department

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      Ali, with the insufficient info provided, my reply is you are a Non-Resident for 2016

    • profile image

      Terrencecy 2 months ago

      hello Mazlan,

      thanks for your share first.

      I came to Malaysia at 15-Jul-2017 which is for business trip , then get employment at 7-aug-2017 , this is a one - year contract .will end at 6-aug-2018

      so I think I could be regard as a residents since

      "•If your stay is less than 182 days for that calendar year (e.g. 20 days in 2015) but your stay continues in 2016 for another 182 days or more"

      my question is I know will charge 28% tax rate AT 2017

      but when can i charge 0-28% in 2018?

      and can I refund my tax of 2017 ? if can may I know when?

      appreciate for your reply

    • profile image

      Ashishkra 2 months ago

      Hi Malan, Can you please help me with this confusion. I have been in Malaysia for more than 182 days in 2017 on PVP. Now I am being offer a job here and need to understand from a income tax perspective of the time I've spent here will make me a tax resident. Does visa matter when it comes to tax resident assessment?

    • profile image

      Ashok 2 months ago

      Hi. Can you please help me with this confusion. I have been in Malaysia for more than 182 days in 2017 on PVP. Now I am being offer a job here and need to understand from a income tax perspective of the time I've spent here will make me a tax resident. Does visa matter when it comes to tax resident assessment?

    • profile image

      Ali 2 months ago

      Hi Mazlan

      Can you please answer my query on tax status for FY 2016

      Arrived in Malaysia around Oct-2016 on Employment pass

      Was in Malaysia till 22nd June 2017 - went out for 17 days (was back on 9th July 2017) my employment continued and am still on same employment pass and payroll.

      What is my tax status for FY 2016 please?

    • greatstuff profile image
      Author

      Mazlan 2 months ago from Malaysia

      Hi, lea. You can refer to the Company Commission of Malaysia website at http://www.ssm.com.my/en/node/22086 on how to register.

      But I don't think you need to register here if your set-up is based in your home country. You need to follow your home country's requirement even though your income comes outside your home country

    • profile image

      lea 2 months ago

      Hello,

      I would like to start an online business in malaysia. Teaching french language in malaysia (online via my website only) .

      I would like to register as enterpreneur

      but im not living in malaysia.

      1-How long it takes for a foreigner to register an online business in kuala lumpur?

      2- Must be resident in kuala lumpur to register as enterpreneur there?

      3-Do i need to open a bank account in malaysia if my clients pay via paybal only?

      4-which taxes must be paid in malaysia?

      5-do I need a physical address if my business is online only?

      Thank you

    • profile image

      Prasad 2 months ago

      I joined KL based company in 1st Feb 2017

      Now I am in Australia to work for a short term of 7 months till end of this year however I am getting paid salary in Malaysia and tax is also getting deducted every month.

      So do I still have to pay flat 26%?

      Are there any exclusions for this case?

    • profile image

      Sharon 2 months ago

      Thanks for your detailed post! I'm looking at MM2M. I have my own business and earn money from US and other countries outside Malaysia). I would still run this business in Malaysia as either a sole trader in Malaysia or company in Hong Kong. Would I have to pay tax on this earnings? It's foreign earned but I'm worried they would class my company as Malaysian and I might still get stuck

    • profile image

      Flip 2 months ago

      Hi Sir!

      Thanks for this insightful article. I just have some questions to ask regarding the tax policy that will be applied to us. Our situation is we've joined the company last July 18 and if we are going to count the days until the end of this calendar year, 2017, we'll only be working for more or less than 150days until Dec 31. May I just ask if when the 2018 comes, the count for days to be considered as resident will continue, including our Jul-Dec stay or it will go back to 0 since the new calendar year has started, and if ever we will not be considered as resident for this calendar year, may I just ask if the tax that we are going to pay for the upcoming months will be refunded in the tax filing on March.

      Thanks!

    • profile image

      Shun 3 months ago

      Hi again Mazlan,

      I mean LHDN said I do not have tax for the year 2016 because I was not a resident of Malaysia. I'm thinking it's because I only worked 3 months for the year 2016? I'm not sure.

      Yes, every month, the tax has been deducted from my salary for six months(from October to March) and I got deducted for the month of April which my company said I need to claim the excess from LHDN.

      Thanks

    • profile image

      Paul 3 months ago

      Does this impact me? I am an Australian, single and 61 years old. Considering MM2H scheme.

      I had a tax number when I was employed by KPMG in Malaysia between 2007 to 2011 and paid tax here.

      Since returning here in late October 2016 I am not generating revenue from within MY by a Malaysian company but being paid out of the UK.

      The tax threshold here is RM34,000 per annum id employed in Malaysia. I wouldn't be earning this in 2017 - may 20k but paid out of the UK for work sent to me from the UK to review.

      So do I need to send in a tax return as not employed under a contract but freelancing. I'm basically unemployed.

      Your thoughts?

    • profile image

      Ali 3 months ago

      Hi

      Can you advise what happened?

      I have a case of similar nature.

      Joined a firm in Malaysia around 15th Oct 2016.

      Took annual leave from 22nd June 2017 till 9th July 2017 and i expect to be in Malaysia for the remaining year without any leaves (planned - cud be job related travels).

      my case looks like below:

      Date of Joining firm in KL 15-Oct-16

      Fiscal Year end 31-Dec-16

      Days in Malaysia during 2016 77

      Continue in 2017 (no break) 1-Jan-17

      Annual leave start date 22-Jun-17

      continuity in 2017 172

      return from leave 9-Jul-17

      leave gap in 2017 17

      Expect to be in Malaysia till 31-Dec-17

      Physical days in Malaysia 2017 347

      Can you advise if I am a resident for tax year 2016 and 2017 both now based on linked years?

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Shun, LHDN said no tax for 2016 is it because you have paid them through monthly deduction and hence no more outstanding tax to pay? Pls clarify.

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Chris,

      Q1 - yes,

      Q2 - you will be charged non-resident rate of 25%

      Q3 - apologies, not sure which is the best option for you. Best to check with LHDN

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Tushar, it should be. try this link http://lampiran2.hasil.gov.my/pdf/pdfam/individual...

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      jellyabby, you should go to LHDN on this matter.

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Wendy for you to know if there's any refund due to you, it is best to visit LHDN in person

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Han, not sure what you mean, but tax amount for stay less than 182days is a flat 25%

    • profile image

      Shun 3 months ago

      Hi Mazlan,

      I work in Malaysia from October 2016 until now. I paid my tax every months for six months. But now, my company wants to renew my Employment visa and asked me to provide the E-filing. I went on the lhdn website and filled the form. After sometime, my hr tell me that I need to amend my e-filing because I put my tax = 0. Last week, i went to lhdn to amend my e-filing. However, now they(lhdn) tell me that for the tax year 2016, I am not liable for tax..

      I am very confuse now. Firstly my hr said I need to pay my income tax every month for six months. And now, lhdn said for the year 2016, I am not liable for tax. Who to believe? And what to do now? I need the e-filing for my employment visa but my hr did not accept my income tax is 0 and lhdn said i do not have any tax for 2016.

      Thanks in advance,

      Shun

    • profile image

      jellyabby 3 months ago

      Hi Mazlan,

      I have 2 expatriate that have their work permit under our Company but we are not paying their salary. They just park their employment pass under our Company. All other expenses (accommodations, allowances, transportation etc etc) all are under their own Company in Singapore. Do we still need to declare their tax? Since our Company are not paying anything at all.

      Appreciate for your advice.

      Thank you.

    • profile image

      Tushar Arora 3 months ago

      Hi ,

      I am staying in Malaysia for more than 182 days, but within these 182 days I went out for 3 weeks for attending work related to my job. I also went to my home country but not more than 14 days. So will it not be considered in the 182 days bracket. If it will be, can anyone please share some document on the official tax website of Malaysia, so that I can show it to my employer. x Your sooner reply will be appreciated. Thanks in advance.

    • profile image

      Chris A 3 months ago

      Hi Mazlan,

      I have a couple of questions:

      1. I worked in Malaysia up until April 2017. Over New year 2016/2017 I spent over a month outside Malaysia, which I believe ensures that 2016 and 2017 are not 'linked' for tax purposes. Hence from Apr 17 when I left Malaysia I will no longer be resident for tax and I am not earning any income from Malaysia - please confirm I am correct.

      2. I bought a property in KL off-plan, which will be completed in 2019 and I intend to rent it out. Considering I will not be living in Malaysia myself will I need to submit a tax return to cover the rental income received as a non-resident? If so what is the tax rate?

      3. Assuming that for Item 2 I need to submit, my ex-company are closing out my tax affairs - it is better for me to keep my tax file open now and submit "zero" returns for 2018 and 2019 until the property income starts?

      Note: Once I have left Malaysia I will have no work permit / resident permit etc - I assume this does not cause an issue?

      Many thanks

      Chris

    • profile image

      Wendy 3 months ago

      Hi Mazlan,

      I was non-residence in Malaysia for 2015. I paid non-residence tax before 30.4.16. However, I was late for form submission M-form (I was outstation at that period so impossibly visited LHDN. Their website was in Malaysian at that time so I wrongly keyed in company income statement rather than individual. Hence the website did not issue form for me).

      I had penalty due to late submission form from LHDN and I paid it on time. However, I was not refunded non-residence tax due to late submission form. Do I have any chances to appeal for tax refunded?

    • profile image

      Han 3 months ago

      Hello,

      May I know how much is the tax percentage I will be able to claim as I am a foreigner working in Malaysia for 6 months?

      Thanks for your reply!

    • profile image

      Gopali Agarwal 3 months ago

      Hi Mazlan, thank you for wonderful information. I am Indian passport holder and I am coming to Malaysia and work on an existing work permit for about 58 days in 2017. I worked on the same work permit last year and I was charged 28% of tax. I returned to India on 28th December 2016. This year, in 2017 I have not worked in Malaysia and first time I will be coming on 12th July 2017 and stay until 7th September, 2017. Will I fall in "no tax" category this year?

      regards,

      Gopali

    • profile image

      Raj 3 months ago

      Hi Mazlan,

      I have joined an MNC in Malaysia on 15th June 2017.

      However, i'm immediately given an international assignment and will stay in Malaysia only for 20 days.

      I will come back to Malaysia after my overseas assignment next year February. I have employment pass for 2 year

      s.

      I will continue receiving salary in Malaysia even though i will not be living in Malaysia. So, for the current year, how will my tax be calculated? Will i be considered resident? or a non resident (less than 182 days) or non-taxable (less than 60 days)?

      Please let me know.

      Thanks,

      Raj

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      Dave J 3 months ago

      My friend has been in your country since early June for a court case. She won the court case and the judge has granted her £1.9 million. I take it this is English pounds. She has opened a Malaysian bank account to have the money paid into it. How much tax will she have to pay to transfer the money out of Malaysia into her own bank account in England. Also, as she has little money of her own now as most of it has been taken up through hotel bills. Can she use that money now in her Malaysian bank account to settle a tax bill.

    • profile image

      Princess 3 months ago

      Hi Mazlan,

      I have started small company in the Philippines and selling Malaysian made equipment on a commission basis of 3 to 7%. I have already sold some equipment and when I was about to claim for this sales commission, they said that they are going to deduct gov't taxes. May I know what is the standard taxes they are going to deduct?

    • greatstuff profile image
      Author

      Mazlan 3 months ago from Malaysia

      Krishna, without detail info on your date of start work etc, I can only assume that you had completed the required 182-day (since you mentioned you were here for 2years). Hence, the tax status should be as a Resident and you can refer to the table to see the %age rate.

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      Krishna 3 months ago

      Hi Mazhlan,

      I'm indian passport holder and worked in MY for two years before. After i quit my job and came back to India. My Ex-Employer, he is a vendor (consultency) asked me to pay tax for not completing 182 days (even not sure) in that particular year. Apart from this, in monthly salary flat tax of 5 % has been deducted. So i didn't i paid the tax amount what they send to me. I'm not sure whether they are trying to cheat me. This will create any problem in future, when i try to re-enter country ? . Need your advice on this.

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      Gopali Agarwal 3 months ago

      Hi Mazlan, thank you for wonderful information. I am Indian passport holder and I am coming to Malaysia and work on an existing work permit for about 58 days in 2017. I worked on the same work permit last year and I was charged 28% of tax. I returned to India on 28th December 2016. This year, in 2017 I have not worked in Malaysia and first time I will be coming on 12th July 2017 and stay until 7th September, 2017. Will I fall in "no tax" category this year?

      regards,

      Gopali

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      Mazlan 3 months ago from Malaysia

      Hi, Teja. Your 182-day will start on your 24th Dec 2016 BUT you must be in the country on 31st Dec 2016 AND 1st Jan 2017 for the calculation to continues into the year 2017. Otherwise, it will restart.

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      Mazlan 3 months ago from Malaysia

      Hi, West. To qualify for the 182-day criteria, you have to be in the country on 31st Dec 2016 AND 1st Jan 2017 for the 'clock to run'. Otherwise, it will restart.

      Any excess tax paid will usually be refunded the following month i.e. in May. If you did not receive any, then there must be no excess tax paid.

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      Teja 3 months ago

      Hi Mazlan,

      Thanks for a very informative guide.

      To my bad I am still confused regarding the Tax Resident of Malaysia.

      I came to Malaysia on Dec-24-2016. So the count of 182 days will start from Dec or it will start from Jan-2017?

      If it Starts from Jan-2017, I had a social visit to my country in March i.e. March-30-2017 I departed from Malaysia and I came back on April-10-2017. then my 182 days will be completed by July 1st. Will I become a Tax Resident of Malaysia or I should stay extra 10 days since I was out for 10 days in April?

      I have an social visit again to my country on 3rd of July. So my 182 days are completed and will I become a tax Resident of Malaysia?

      Thanks...!

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      West 3 months ago

      Hi Sir,

      I started working in Malaysia last Aug.29,2016.

      My tax rate is 28% until now.

      But next week I will be able to complete the 182 days requirement to become a resident.

      I was just away from Malaysia for only 12 days because I took a Christmas vacation. I did not exceed the maximum 14 days.

      Last march 2017, I filed my tax as a Non resident for the year of tax assessment for 2016.

      My question is when can I get the tax refund for August-Dec 2016 and January-June 2017?

      Thank you.

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      Mazlan 3 months ago from Malaysia

      Deb, if you were in the country on 31st Dec 2016 and 1st Jan 2017, then your 182day calculation will continue from Oct 2016. But in the absence of the actual date (day-month-year), I can't help you

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      Mazlan 3 months ago from Malaysia

      Sunil, by virtue of Paragraph 7(1)(d) of the Tax Act, an individual will be considered as a tax resident for the basis year if:

      (a) he is a resident for the immediately following basis year; and

      (b) had been a resident for the three immediately preceding basis years.

      I believed you fall under this category and hence, you will under a Resident Status.

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      Mazlan 3 months ago from Malaysia

      Ellyson, it is cumulative. So, if you leave the country for more than 14 days before the 182 days, the clock WILL reset.

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      Deb 4 months ago

      Hi,

      I am working in Malaysia since October,2016.

      During January,2017 I had to take a social leave away from Malaysia for 11 days.

      Again during the month of June I had to travel to my country for 19 days.

      Can you please suggest me, what should be the date considered now for me when I will become eligible as Tax Resident of Malaysia for the year 2017. how does the calculation of 182 days happen in this case?

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      Sunil Kumar 4 months ago

      I worked in Malaysia from September 2012 till October 2016 and my tax deduction was based on resident when I left. Now I have applied again in a company in malaysia and I'll start working again from September 2017. So my question is, will my tax deduction be based on resident status or it will be as per non-resident i.e 28%?

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      Ellyson 4 months ago

      Hi Mazlan,

      Thanks for a very informative guide.

      I just to ask about 14 days, is the 14 days accumulated?

      For example my 183 days duration is from June to November. Then i will exit and go back to malaysia for 3 days in September and 12 days in October then will the clock of 183 days be reset?

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      Mazlan 4 months ago from Malaysia

      NL, yes you have to submit your tax return

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      Mazlan 4 months ago from Malaysia

      Lei-Lei, any surplus tax paid will be refunded and in my case, I got my refund in June. I suppose the officer wanted to tell you that if there is any surplus, then the money will be refunded BY July.

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      NL 4 months ago

      I am Malaysian but I stay in Singapore. I have business in Malaysia (sole-proprietor). I need to submit form M?

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      Lei-Lei 4 months ago

      I started working here in Malaysia last (Mid) July 2016. I already filed my tax last April but as a non-resident as advised by the officer. She also told me that I can receive the refund this July. However, I received a letter from LHDN indicating that I have nothing to refund this year. Is this correct? If yes, would you know why did the officer then told me that I can have refund by July?

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      Mazlan 4 months ago from Malaysia

      Hao, 2017 income will be assessed in 2018 after your tax submission before the end of April 2018. Will your stay be 182 days?

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      Mazlan 4 months ago from Malaysia

      Akitir, the share option/benefits issued to an employee by the parent company in Australia is still a benefit/income derived from having an employment with the company in Malaysia. Therefore, it is taxable. (an employee’s income in respect of his employment in Malaysia will be subject to Malaysian tax regardless of whether it is paid in Malaysia or outside Malaysia)

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      Mazlan 4 months ago from Malaysia

      AY, unfortunately, you have to. Any residents with incomes from oversea employment must submit their tax return to the LHDN.

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      Hao 4 months ago

      I started working in Malaysia on 27 Dec 2016.

      And I'm going to leave out of Malaysia on 03rd July 2017.

      I've spend 12 days out of Malaysia within this period.

      Could you guide me how to get the exceed tax on this period ?

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      Akitir 4 months ago

      Hi Mazlan

      Thanks for the great article !

      Can I please check with you if share benefits received by employees (expats) are taxed in Malaysia

      I was given shares in the company which i haven't cashed out yet. Do I need to pay tax on these shares if the shares were issued to me by the parent company (registered outside Malaysia) ?

      Parent company is in Australia (issued shares of)

      Operating company in Malaysia (employer)

      Thank you !

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      AY 4 months ago

      Hi Mazlan, i'm a tax resident in MY, however i'm actually employed in Singapore (i'm working remotely), so all of my income is derived from sources outside of MY. Do i still need to pay MY taxes on my SG income? Thanks.

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      Mazlan 4 months ago from Malaysia

      Chris, can you reword your questions as I don't understand them. Thanks

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      Ashu80 4 months ago

      Hi Mazlan. Its good to get paid well in Malaysia as you can live a lavish lifestyle! However, can you suggest some ways as to how I can avoid paying heavy taxes due to a higher pay scale? I mean are there any changes that I can ask my employer to make to my salary structure that would avoid the heavy taxation?

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      Adi 4 months ago

      Hi Mazlan- As an expat, what are the ways that i can save tax? Are there any changes I can ask my employer to do in my remuneration package to pay lower tax (if possible)?

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      Tan Hooi Khoon 4 months ago

      Hi Mazlan,

      My manager is from Austria and he's been stayed and worked in Malaysia from last June,which means more than half year now and how should he proceed to apply for a income tax account number?

      Could it be done online or does he has to go to the LHDN himself with the original passport?Are there any other documents required,please advise.

      Thanks in advance.

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      Arief Paulus 4 months ago

      Hi Mazlan, thank you very much for your article. I am looking for job in Malaysia, and yes I am foreigner. At first time should I be accepted, I will get 25% cut from my salary annually or monthly? Thank you very much for answering it. I think it should mentioning to my next to be office should they interested in me.

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      Niks 4 months ago

      Hi Mazlan,

      Very helpful post.

      Just wanted to ask that I got a job offer from a company in penang island. They are offering me 5000 ringgit per month for first 6 months and after that there might be increment. Just wanted to confirm that there will be no deduction in my salary in name of tax and i have to submit the taxed amount to Hasil. Can you please let me know how much in hand salary i will get per month if earn 5ooo ringgit per month in penang and will that be sufficient for me to live healthy lifestyle there. Thanks in advance

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      Chris 4 months ago

      Sir, Thanks for nice article. My company has a contract with Malaysian company. To fulfil the contract obligation, I work in Malaysia. I spend about two to three weeks a month in Malaysia. I have paid in Singapore. I don't have any income in Malaysia.

      1. Do I have to pay tax in Malaysia?

      2. Do I need any work related visa in Malaysia?

      Appreciate your help.

      Thank you sir

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      Chris 4 months ago

      Sir, Thanks for nice article. I have paid in Singapore and while working in Malaysia.

      1. Do I have to pay tax in Malaysia?

      2. Do I have to get any work related visa in Malaysia?

      Appreciate your reply.

      Thanks Sir.

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      Mazlan 4 months ago from Malaysia

      Esa, yes you will

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      Esa 4 months ago

      Hi Mazlan, this is an informative article. I'd like to ask you something. I started work in Malaysia in May 14, 2017 and I will complete the 182-days period without any break (November 13). If I spend the 2018 New Year (31 Dec 17-1 Jan 18) outside Malaysia, will I still be considered a resident for the next year?

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      Mazlan 4 months ago from Malaysia

      Hi, Venky. Although there is no break in your stay, I am not too sure if it will be considered as a continuous stay for the 182day calculation. Pls, go to the nearest LHDN office to check this out. And if you don't mind sharing the answer, here for the benefits of other readers. Thanks

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      Mazlan 4 months ago from Malaysia

      Ali, not sure if it can be considered but you can always try. You need to keep the original receipt of the zakat that you had paid.

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      Venky 4 months ago

      Hi Dear Author,

      I have question of my real case scenario, where my 182 days will be completed in Aug,2017, if in between, I have gotten a new job in Malaysia itself. 1. What are the terms of taxation?

      2. Will I be able to claim the deductions occurred during these 6 months at current company after joining a new one?

      3. If I resign before 182 days in order to join new company and work more than 182 days to serve the notice period, Can I claim this tax deduction?

      4. On a new EP, after joining the new company, the period of 182 days will restart?

      Please explain the pros and cons? How to make the right decision?

      Thanks very much in advance,

      Venky.

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      Ali 4 months ago

      Hello Sir, thanks for nice Article, May I know if the zakat paid in another country is entitle by IRB ?

      I have paid Zakat in Pakistan while I am working in Malaysia.

      Appreciated your reply.

      thank you !

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      Mazlan 4 months ago from Malaysia

      Lay, you are not allowed to work under a student visa. Your 182 days starts from your work visa

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      Mazlan 4 months ago from Malaysia

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      Mazlan 4 months ago from Malaysia

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      Mazlan 4 months ago from Malaysia

      Ananya - 60 days

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      Lay 4 months ago

      Hi

      I have one enquiry regarding the tax.I just finished my studyin Malayisa.i got the job to join in July 2017.my question is i am staying in Malaysia for 182 days in 2017 calender years with student visa.will it be counted as a resident rate for tax payment once i start join the job in July?

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      Mnunes 4 months ago

      Hi Mazlan

      Hope you doing great.

      Please check if you can help me with this one.

      I have been offered a role in malasya and the salary is 16000rym gross monthly

      Can you inform me please how much will be the net income after tax / epf for the initial 6month period and after.

      Ty very much

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      John 4 months ago

      Hi Mazlan,

      I am foreigner and I am have been working in Malaysia for the last 3 years but my salary has not exceeded the 4k, and my tax was always 0.

      Now I am gonna start a new job with 5k as my salary, and I am gonna start the new job without leaving the country.

      Will you please clarify the percentage or the amount of tax that I need to pay?

      I really appreciate your help!

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      Ananya 4 months ago

      Hi Mazlan

      Please can you let me know the maximum no of days an Indian can stay in Malaysia on a PVP to avoid tax. The expat will be paid from India.

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      Mazlan 4 months ago from Malaysia

      hi, Zameer

      Not sure if I understood your question. The tax filing must be done by you and should have been submitted before end April 2016. Did you do this? Was there a monthly tax deduction done of your monthly salary? If you did the tax filing yourself, you should know how much tax to pay for 2016.

      The company deducted the amount from your May 2017 salary to pay for your 2016 tax? How do they know how much to deduct?

      I suggest you check again with your office on this calculation and also go to LHDN to check on your tax filing

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      Mazlan 4 months ago from Malaysia

      Hi, Capt Bhupati.

      Answer to Q1: your rate will be as a Resident, provided all requirements are met (see article for this)

      Answer to Q2: Tax as a non-resident with a flat rate of 28% of your gross income

      Answer to Q3: Exempted from paying tax

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      Mazlan 4 months ago from Malaysia

      Arun, as a non-resident you are subject to a flat tax rate of 28% on the gross income and not from your RM3000. Unfortunately, you will not enjoy any tax reliefs/tax deductions.

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      Mazlan 4 months ago from Malaysia

      nilesh, you were out of Malaysia for 9 days in 2016? If the 14days is prorated from your 16th Aug 2016, it should be about 5 days.

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      Zameer 4 months ago

      I'm working in Malaysia since January 2016.

      I received my tax return for 2016 with may 2017 salary.

      My company deducted may 2017 tax from the total amount

      E.g.

      My may 2017 is 13000 and tax deducted is 1632

      My tax return is 20000 for 2016

      The company deducted tax from (may salary + 2016 tax return) at the rate of 20%.

      The amount is huge.

      Is it normal in Malaysia? ?

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      Capt Bhupati B Rout 4 months ago

      1. I am an Indian , working in a malaysian flag offshore vsl .

      If i work onboard more than 182 days - what will be the tax regulation for me?

      2. I am an Indian , working in a malaysian flag offshore vsl . If i work onboard less than 182 days - what will be the tax regulation for me .?

      3. I am an Indian , working in a malaysian flag offshore vsl .

      1. If i work onboard less than 60 days - what will be the tax regulation for me

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      Arun 4 months ago

      Hi i am from India and working as Civil Engineer. My salary is 4200 as basic salary. If i pay 28% then i will get RM3024 only. Its about my salary is going very less. The tax will be calculated for whole basic salary or after RM3000. Kindly clarify this issue. I joined in april 2017.

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      nilesh 4 months ago

      Thanks for the great post

      I enter Malaysia on 16 Aug 2016 and till date I was out of malaysia for only 9 days . When I opt to fill the tax return the person at HASIL asked me to file as resident .I did the same but I did not get any money back in my account so I called them . Now they asked me to visit my home branch to sort this issue , any idea if they will consider me ass resident or not

      Thanks and cheers

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      Mazlan 5 months ago from Malaysia

      Ravi,iIf your stay in Malaysia is less than 60 days, then they are no tax to be paid. Otherwise, annual tax filing submission is required. (For general info to other readers, Category 3 Visa are for those earning between RM2,500 to RM4,999 and contract period not exceeding 12 months.)

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      Mazlan 5 months ago from Malaysia

      Michael, yes they do for Resident and the relief is limited to only RM6,000 for Life Insurance premiums AND EPF contribution. So if your insurance premium is RM1000 and EPF contribution is RM9,000. You can only apply for RM6,000

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      Michael 5 months ago

      Do expatriates get income-tax relief if they were to purchase life insurance policy in Malaysia?

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      Mazlan 5 months ago from Malaysia

      Matthew, the followings are taken from the Tax Office website, which is self-explanatory:

      Non-Resident Public Entertainers

      "Public Entertainer" means a stage, radio or television artiste, a musician, athlete or an individual exercising any profession, vocation or employment of a similar nature.

      Remuneration or other income in respect of services performed or rendered in Malaysia by a Non-resident public entertainer is subject to withholding tax at 15 % on the gross payment.

      The present practice continues whereby the sponsor of the non-resident public entertainer is required to pay withholding tax at 15 % before an entry permit for the non-resident public entertainer can be obtained from the Immigration Department

      Double Taxation Agreements and Protocols

      Malaysia has concluded about 69 effective Double Taxation Agreements (DTA). For information on the varying rates of withholding tax on interest, royalty and technical fees, see "DTA Agreement Rates".

      For refund of withholding tax overpaid by the payer due to the DTA reduced rates, the payee must forward the application for refund to the Director, Non-Resident Branch together with the following details:

      1. Tax resident certificate of the payee from the tax authority of the country where the payee is a resident.

      2. Evidence to prove that the conditions stipulated in the DTA are met.

      3. Proof of payment of withholding tax.

      Address as follows:

      Director

      Non Resident Branch

      Customer Services Unit

      3rd Floor Left, Block 8

      Government Office Complex

      Jalan Duta, 50600 Kuala Lumpur,

      MALAYSIA

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      Mazlan 5 months ago from Malaysia

      Hi, Scott, I believed they will check your passport to see date/time of departure/entree out/to the country

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      Mathew 5 months ago

      Hey if I'm working on a movie for 70 days and you have taken 15% tax how do I get this back when I'm in the uk.

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      Scott 5 months ago

      Do Malaysia count days out of the country per night (same as UK) - for example, where are you at midnight on a particular day? Some of my friends are telling me they do not count travel days at all...?