Malaysian Tax Issues for Expatriates and Non-Residents

Updated on January 31, 2018
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Born and raised in Malaysia, Mazlan is proud of his Malaysian and Asian heritage and likes to share its mysteries, culture & 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: The Malaysian Inland Revenue Board, (or known locally as Lembaga Hasil Dalam Negeri or LHDN for short) 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 into 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.

For detail definition of Residence, refer to LDHN site here.

What is Certificate of Residence (COR)?

A Certificate of Residence (COR) is issued by LHDN to confirm your residence status for Malaysian tax purposes.

With this COR, you can claim tax benefits under the Double Taxation Agreement that Malaysia has with several countries, and to avoid being tax twice on the same income.

How to Apply for Certificate of Residence

You can apply manually by going to any LHDN branches. Documents to bring with you are:

  • Your original and photocopies of passport, and
  • List of movements in/out of Malaysia for the year of assessment that you are applying.

You can also apply online through e-Resident.

How Long it takes to issue COR?

If all documents and information are complete and in order, it will be ready within three working days.

How Much Does COR Cost?

Application and Issuance of COR are free.

2. How to Get Your Income Tax Number

Usually, your company will arrange this for you. If this is not the case, go to the nearest LHDN's office to register and get your income tax number. 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 office will be packed with last-minute submissions 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 LHDN 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 LHDN'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 LHDN 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. When to File Your Tax Return

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 LHDN:

  • 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 LHDN.

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 LHDN 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. the 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 nationals that are categorized as “knowledge worker” will enjoy the reduced tax rate of 15% if you reside 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 the 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 the Purchase of Malaysian Properties by Foreigners: The minimum price of RM500,000 is now increased to RM1m.

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 a refund as IRBM will process this within 30 working days for e-filing submissions and within 90 days if submissions were 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?

LHDN will credit directly to your bank account that you had registered with them. Unfortunately, there is no notification from 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 LHDN 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.

Questions & Answers

© 2014 Mazlan

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    • greatstuff profile imageAUTHOR

      Mazlan 

      3 hours ago from Malaysia

      No, it will not be accepted for both cases

    • profile image

      Jane 

      4 hours ago

      Hi Mazlan,

      Will the tax reliefs here in Malaysia be allowed if the receipts are from my home country?

      Also, I have a life insurance from my home country. Can I use that as a tax relief under: Life insurance dan EPF INCLUDING not through salary deduction (6,000 RM)?

    • profile image

      sabeatra 

      3 weeks ago

      Mr. James, an Australian sent by his company in Australia to Malaysia to provide consultation to a subsidiary company in Klang. He was in Kuala Lumpur from 1 March 2017 to 30 June 2017. During the duration of his duty from 15 March 2017 to 10 May 2017, he received USD 20,000 which bank into his account in Australia.

    • profile image

      sar 

      3 weeks ago

      Dear Mazlan,

      I have started working in Malaysia in April 2018. My 182 days will be completed by end of September 2018 and become tax resident here. But my current contract end by December 2018.

      Is it possible for me to submit tax clearance before I leave Malaysia in December and get refund of excess tax I paid during initial 6 months? or I have to wait till yearly tax return in April 2019 for refund.

    • profile image

      Sumit Ghose 

      4 weeks ago

      Dear Mazlan,

      Last year in 2017, I had started working in Malaysia in Sep. As I was not completing 182 days in FY 2017, I had done Tax return file for FY 2017 on 10th April 2018, which was calculated with 28% rate (Non-resident).

      Now,as I have completed 182 days in FY2018 (Resident Status), now previous year FY 2017 should be treated as Resident only.

      It means Can I apply to LHDN for getting back the overpaid tax of FY2017 (Sep to Dec) ?

      How to proceed for the same, Can you guide me?

    • profile image

      Vishal Patki 

      5 weeks ago

      Hi Mazian,

      I came to Malaysia on 19th Jan on EP1 and EP2 started from 25th Jan 2018.

      I went out of Malaysia two times

      1. for 16 days in Feb 2018

      2. for 25 days May 2018.

      now if I stay here till sept 2018 my total physical presence in Malaysia will be more than 182 days.

      can you tell me in this case am I eligible for tax return after Sept 2018?

      also in April 2018 end once while leaving Malaysia I cleared tax and return in may2018

    • profile image

      Vaishnavi 

      6 weeks ago

      I am an expat in Malaysia, and got taxed as per resident rates in 2017. I stayed for four months in 2018(moved out of Malaysia on april 30th), consecutive to 2017. Initially, I was taxed as a resident, later this was revised and I have been asked to pay the non-resident percentage of pending tax. Could there be some miscalculations here?If I have moved out in april do I have to pay 28% tax for the 4 months?

    • profile image

      Sumit Ghose 

      6 weeks ago

      Last year in 2017, I had started working in Malaysia in Sep. As I was not completing 182 days in FY 2017, I had done Tax return file for FY 2017 on 10th April 2018, which was calculated with 28% rate (Non-resident).

      Now,as I have completed 182 days in FY2018 (Resident Status), now previous year FY 2017 should be treated as Resident only. It means Can I apply to LHDN for getting back the overpaid tax of FY2017 (Sep to Dec) ? How to proceed for the same, Can you guide me?

    • profile image

      6 weeks ago

      Hi Mazlan

      I submitted form at the end of March and went to tax office to ask how proceed my tax return and submitted request early this months and still haven’t any received yet. Should I go to tax office and tell them to be hurry again? I paid a lot tax last year. One of my colleagues said that he got some document( cheque) from tax office. Am I supposed to get like cheque too?

    • greatstuff profile imageAUTHOR

      Mazlan 

      7 weeks ago from Malaysia

      Mee, yes you must apply for your tax number. In my article, it explains how to get one.

    • greatstuff profile imageAUTHOR

      Mazlan 

      7 weeks ago from Malaysia

      Maxim Son, it is from the moment you arrive in the country and inclusive of working and non-working days i.e. Mon to Sunday every day of the week

    • profile image

      Mee 

      7 weeks ago

      I am under DP10 before I got hired by an agency. I started working November 2017,our salry is below RM3100 before epf deductions(we do not have epf so to speak), do I need to get a tax number?

    • profile image

      Maxim Son 

      7 weeks ago

      Dear Mazlan,

      i have started my work in Malaysia from 17 June of this year and i would like to know, am i considered as resident or none-resident? im just a bit confusing a bit with definition of 182 days, is it inclusive working days or in total.

      Thank you

    • greatstuff profile imageAUTHOR

      Mazlan 

      7 weeks ago from Malaysia

      Shiva, your income for 2017 must be declared in your tax submission which was last April 2018? Did you do your 2017 year of assessment submission? If there is any surplus, you would have gotten your refund by now.

    • profile image

      Shiva Raj 

      8 weeks ago

      i am in Malaysia from August 2017 and company is deducting 28% tax from my salary, do i get refund for the year 2017 when i file Income tax return in the year 2019.

    • greatstuff profile imageAUTHOR

      Mazlan 

      2 months ago from Malaysia

      pamavirk, any income received for the year of assessment will be taxed even if it is only for a few days for that year. If there is any refund, you should have received a notice from the tax office by now ( for 2017 tax year)

    • profile image

      pamavirk 

      2 months ago

      Hi sir. Thanks for the time and advice you give here.

      I arrived here in Malaysia in December 2017. I was taxed for that month. I still work here but have been to the US in 2018 (for a month).

      As my days here in 2017 totalled less than 60 (most of December) will I be eligible for a tax refund for that period (December 2017)?

    • greatstuff profile imageAUTHOR

      Mazlan 

      2 months ago from Malaysia

      sar, based on LHDN definition.. 'an individual is considered to be physically present in Malaysia for a whole day although he is present in Malaysia for part(s) of a day'

      So by this definition, if your flight is at 6 am on the 7th July and arrival in Malaysia is at 11 pm on 13th July, you are considered to be present in Malaysia on the 7th and 13th July.

    • profile image

      sar 

      2 months ago

      Dear Mazlan,

      I am planning to travel out of Malaysia during my initial 182 days period.

      Can you please let me know whether travelling date (departure/arrival) considered as out of Malaysia or inside Malaysia?

      As I can be out of country only for 14 days during 182 days period, I need plan my travelling accordingly.

      Thank you.

    • profile image

      Cd 

      2 months ago

      Hi!

      Are dependent pass holders (who are not allowed to seek employment in Malaysia) allowed to set up a tax number in Malaysia? It is now not possible to set up a bank account without one.... thank you

    • greatstuff profile imageAUTHOR

      Mazlan 

      2 months ago from Malaysia

      ni, if there's any refund to be made, it WILL be credited into your bank account registered with the tax office. You can also give them your home bank account detail and tell them to credit into that home account if it is done after your departure date.

    • profile image

      ni 

      3 months ago

      Hi Mazlan,

      may I ask for your advise.

      I am an expat and filed my taxes via e-filing beginning of April. After 30 days passed and no refund was received I contacted the branch and they reuqested bills and passport copies etc, as I am being audited. The whole process takes a lot of time now. As I leave Malaysia in July this year, I worry what happens if I dont receive my refund before I leave M. Will I never see that money again? My experience is that calls are never answered, so I fear to loose my high tax refund :( what should I do? do you know if someone else can follow up on my case for me, or an agent?

    • profile image

      Rahiman Shaik 

      3 months ago

      Hi Mazlan,

      I am travelling to home country within initial 182 days period. Is travelling dates considered as "out of the country" or from next day they count number of days?

      Excluding departure and arrival dates, I am out of the Malaysia for 6 days. In this case immigration considered my stay as 6 days for 14-day 'out of country validity period' or 8 days including journey days.

      Thank you for your info.

      Regards,

      Rahiman.

    • profile image

      Shajan 

      3 months ago

      I'm new person to working here.

      Here my company detection of tax in my salary 25%, but I have employment pass...

    • profile image

      Shaapla Sen 

      3 months ago

      Hi Mazlan,

      Greetings!

      Could you please let me know the rate of tax refund for an expatriate who will be working there long term (more than 182 days)?

      I understand there are rates based on duration of stay, however have not been able to find information related to tax returns or tax benefits.

      In this case the employee will be working for more than 3 years.

      Please advise :)

    • profile image

      IU 

      3 months ago

      Hi Mazlan,

      I received lhdn reply for my appeal but it's in Bahasa. Google translate is not helping me at all. There are 3 values highlighted in the letter. Can you please help in explaining these:

      1. Pendapatan Bercukai

      2. Cukai kena dibayar

      3. Cukai dilepaskan

      Thanks in advance.

    • profile image

      Kloie 

      3 months ago

      Correct me if I understood this wrong — I arrived Nov 2017 and stayed for the new year in MY so 2017 will be linked to 2018. I would be resident by May 2018 and was expecting my tax refund. However, when I got to LHDN, they told me that I need to complete the 182days for 2018 (Jan - July) and that I should submit extra documents in July to get my refund. So it seemed the linking is void and it doesn’t matter if I was here during new year etc?

    • greatstuff profile imageAUTHOR

      Mazlan 

      3 months ago from Malaysia

      Nas, yes.

    • profile image

      Nas 

      3 months ago

      Hi Mazlan, I would like to ask about expatriate who entitle for resident (stay more than 180 days).

      Can they claim relief for:

      1. children and wife who is not staying in Malaysia

      2. education and medical insurance purchase for wife and children outside Malaysia.

    • greatstuff profile imageAUTHOR

      Mazlan 

      3 months ago from Malaysia

      Ken, yes it should be as resident

    • greatstuff profile imageAUTHOR

      Mazlan 

      3 months ago from Malaysia

      Randy, your tax for 2017 is calculated as a Non-Resident and if there is any excess tax paid, LHDN will refund and credit to your bank account that you had given in the form when you filed your tax return

    • greatstuff profile imageAUTHOR

      Mazlan 

      3 months ago from Malaysia

      Zaidi Asad, please refer to item #6 in the article which is self-explanatory.

    • profile image

      Ken K 

      3 months ago

      Hi, I have a question regarding below details:

      Yr 2014 - In Malaysia for 287 days (student visa)

      Yr 2015 - In Malaysia for 323 days (student visa)

      Yr 2016 - In Malaysia for 346 days (working visa)

      Yr 2017 - In Malaysia for 119 days (working visa)

      For year 2017 is it still counting as a resident?

      As I have stayed more than 90 days from 2014 to 2016

    • profile image

      Randy McCurdy 

      3 months ago

      We are in the same situation as Asad that posted 9 days ago . We arrived July 4, 2017 and are short of the 182 day requirement. We have done our taxes for 2017 and had to file as a non-resident. We plan to stay for 182 days consecutively for the first part of 2018. What do we need to do to recover the excess tax payment for 2017 ?

    • profile image

      Zaidi Asad 

      4 months ago

      I am working in Malaysia since Oct 2017, and wanted to file tax return for 2017, as i have not completed 182 days in 2017 however i am sure to be in Malaysia up to July 2018 and will be qualifying for the clause of stay of 182 days in the succeeding year and qualify as tax resident, so in this case whether should i file tax return for 2017 as Resident or Non Resident, and if the tax return is filled as Non resident is there any provision to get it corrected by July 2018 and get the refund of the excess tax paid?

    • profile image

      Asad 

      4 months ago

      Hi, I am working in Malaysia since Oct 2017, and wanted to file tax return for 2017, as i have not completed 182 days in 2017 however i am sure to be in Malaysia up to July 2018 and will be qualifying for the clause of stay of 182 days in the succeeding year and qualify as tax resident by then, so in this case whether should i file tax return for 2017 as Resident or Non Resident, and if the tax return is filled as Non resident is there any provision to get it corrected by July 2018 and get the refund of the excess tax paid?

    • profile image

      Senthil 

      4 months ago

      Hi Mazlan,

      Thanks for your valuable inputs. I have a query regarding 14 days absence. Suppose if I leave Malaysia on 1st of a month and return on 5th of the same month then how is the absence calculated. Are 5 days considered as absence or 3 days? I assume 3 because 1st and 5th I will be physically present.

      Could you please clarify. Heard different versions until now.

      Please advise

    • profile image

      Ren 

      4 months ago

      Good day, Mazlan.

      I started working in Malaysia as a foreign worker in August 2017 and just filed my non-Resident tax (M Form) since the number of days from my start date to the end of the tax year is insufficient for the 182 day requirement and, as I understood, since I was not in the country from 31 Dec 2017-5 Jan 2018, I cannot link last year with this year.

      So this year, since I have a full year work, I am hoping to fulfill the 182 day requirement. I arrived in the country on 5 Jan, left again to attend to important matters back home on 28 Jan-3 Feb (total of 7 days), and am planning to leave again on 10-13 April (total of 4 days) and 11-13 June (total of 3 days). However, I have no other trips outside of the country left planned until the end of July.

      I just want to verify if I understood everything correctly (with regards to linking and everything) and if I will be able to file a BE form for the next tax filing since all in all, the days I am away is a total of 14 days and as I've read, we are allowed to leave the country for 14 days within the 182 days, correct?

      Thank you so much in advance for your assistance, I really appreciate it.

    • profile image

      Haky 

      4 months ago

      Hi Mazlan,

      Thank you very much for this detailed overview! It already helped me a lot!

      One more question that I have is whether my income as a resident (staying more than 182 days) would be taxed, if I work for a foreign company that doesn't have an office in Malaysia.

      Would I be tax exempt, since the source of my income is not coming from inside of Malaysia?

      Kind regards from Germany ;)

    • profile image

      Maryke 

      4 months ago

      Hi cab you please advise? me and my husband have been in the country from 28 September working at a international school . We stayed in the country for 95 days until 31 Dec 2017 and continued to stay without leaving for another 45 days in Jan and Feb 2018 we went to South Korea for 5 days in Feb and have been in Malaysia since, have we according to the tax regulations completed our 183 days?

    • profile image

      Ismayil 

      4 months ago

      Hi Mazlan, I am planning to move to Penang for work. My salary would be less that MYR 20,000. At what rate will I be taxed? I have 2 school going kids and home-maker wife. Thank you very much.

    • profile image

      Satya 

      4 months ago

      Hi Mazlan, Thanks for sharing valuable information for the expats.

      I need your suggestion/help in claiming the refund. I came to Malaysia in Sep 2017 and I believe I completed 182 days by now, as I have not left Malaysia from Sep 2017. I am going back to India this month end and I submitted my tax details in order to check for the refund. Unfortunately, the officials informed me that I need to be in Malaysia until June this year to claim the refund. And according to them I am not a resident eventhough I completed 182 days here.

      From your previous responses to the other users, it's evident that I can get my tax back. But In contrast to that , the officials informed me that I cannot get it back.

      Is there anything that can be done in this case. Please help

    • profile image

      AXC 

      4 months ago

      Hi Mazlan,

      I’m a Malaysian who recently moved to Germany. I’m a freelancer who is deriving income from clients in Malaysia. As i am currently a non-resident, I’m guessing i would be subject to 28 percent tax. Aside from this amount, would I need to worry about any other kinds of taxes? Would I be required to pay taxes in Germany though Malaysia and Germany have a Double Taxes Agreement? Thanks

    • profile image

      Roy 

      4 months ago

      Hello,

      I have joined a university in Malaysia on September, 2017. And till now, I have completed more than 182 days in Malaysia. My university has not deducted any tax in 2017, and started deducting tax from 2018 as a resident. Now, I got the EA form the university, and I am going file my income tax. According to your replies, it seems I have already qualified for resident status. Do you have any authentic link or document to support this. I am a bit confused between total 182 days connecting from base year to proceeding year. Or it is 90 days in one year followed by another consecutive 182 days in the proceeding year. Please clarify.

    • greatstuff profile imageAUTHOR

      Mazlan 

      4 months ago from Malaysia

      I believed you have to submit relevant documentation to your bank for them to amend accordingly

    • greatstuff profile imageAUTHOR

      Mazlan 

      4 months ago from Malaysia

      AK, you sent a similar question through email and I have answered to your email. Pls, check.

    • greatstuff profile imageAUTHOR

      Mazlan 

      4 months ago from Malaysia

      Cubin, any income will be tax and since your last day is April 2018, you need to file both 2017 and 2018 income as well as submitting your tax clearance before exiting the country and for your employer to release your last month salary. Read my article on this at https://toughnickel.com/personal-finance/Guide-on-...

    • greatstuff profile imageAUTHOR

      Mazlan 

      4 months ago from Malaysia

      Tan, yes it will be NR before the 182days and Resident once he is qualified for resident

    • greatstuff profile imageAUTHOR

      Mazlan 

      4 months ago from Malaysia

      Yes, you have to be in the country on the last day of 2017 i.e. 31st Dec 2017 and the first day of 2018, i.e. 1st Jan 2018 for the 2017 time spent to link to 2018 and for it to add up to 182 days.

      What was their answer to the refund?

    • profile image

      Kat 

      4 months ago

      Hi Mazlan, I started working last quarter of 2017 as well. I have a 1-year contract here. I'd been told by LHDN that the 182 days count resets in 2018 and it is only possible to link 2017-2018 if I become a resident status within the first 182 days of 2018. (LHDN actually gave different answers regarding on refunds.) Any insight?

    • profile image

      Tan Hooi Khoon 

      4 months ago

      My company hired an Indonesian Software Developer with basic pay rm3000+fixed travelling allowance of RM100

      He was categorised by ESD under category III-Knowledge/skilled worker,and the validity of employment pass will only last for 12months.

      So,in this case to which category should i select in the pcb calculator when paying his salary for the first time?I think it is either Non-Resident before exceeding 182days and Resident more than182 days?(In PCB there are 4 categories to be selected-Resident,Non-Resident,Returning expert program,Knowledge Worker)

      Please advise.

      Thank you very much.

    • profile image

      Cubin 

      4 months ago

      Hi Mazlan,

      I am an expat and started to work in Malaysia last Dec11'17, but will be resigning and last day will be on Apr6'18.

      Will i be filing my tax for both dec11-31'17 and jan1-apr6'18? What will be the computation then?

      Thanks.

    • profile image

      AK 

      5 months ago

      How is ESOS based earnings to be treated. I am employed in Malaysia and a Tax resident here (expat). My company granted me ESOS which i excercised for the tax year 2017 and my co deducted and sent tax to LHDN. is the income from ESOS subject to tax and does it go under "Statutory income from employment" or under "Statutory income from interest, discounts, royalties, premiums, pensions, annuities, other periodical payments and other gains or profits"

      More important - i had an 1st excercisable date in April 2017 but i excercised on later dates my ESOS. Now i understand the taxable income is lower of the earnings between 2 dates as explained in section 7.1 - http://www.ctim.org.my/download.asp?cat=14&fil...

      Can you please throw light on whether indeed, i can take this link as base for calculating taxable income from ESOS?

    • profile image

      kannan 

      5 months ago

      Hi Mazlan,

      i have been Malaysia in last 2 years. now i changed to new employer. i have already paid 28% tax for old employer. now my question is i need to pay 28% for new employer or no need?

    • profile image

      Jleroy 

      5 months ago

      I have been over 13 years in Malaydia under MM2H. Why is my bank account still classified as non-resident?

      Any known procedure to have the bank change it to “Resident”?

    • profile image

      suresh 

      5 months ago

      I have worked in Malaysia for 7months iam from india. company deduct 28percent upto 6months i left Malaysia without informing company can i get back my tax is there any way

    • profile image

      CS 

      5 months ago

      Hi there, I am a Malaysian but currently I am studying abroad but my employer in Malaysia still paying me salary. Am I allowed to claim for lifestyle deductions for sports equipment, books and internet I bought abroad? Or lifestyle deductions are only applicable for spending in Malaysia? Many thanks!

    • profile image

      James 

      5 months ago

      I have been living over ten years in Malaysia under MM2H (no work in Malaysia). Why is my bank account still categorized as „non-resident“ ?

    • profile image

      Nanabila 

      5 months ago

      Hi Mazlan,

      I have been living in Malaysia as a student for the past 8 years. and I got a job in Oct 2017. I have stayed more than 182 days even before I started working. Hence I believe I am eligible for resident tax, as I have also confirmed this with the LHDN in Nov 2017. However, there was an error made and my office has been making me pay non-resident tax until now.

      As such, I should be able to file a return by this April 2018 right?

      and what are documents I need to prepare other than form&passport?thanks

    • profile image

      AK 

      5 months ago

      hi

      How is ESOS based earnings to be treated. I am employed in Malaysia and a Tax resident here (expat). My company granted me ESOS which i excercised for the tax year 2017 and my co deducted and sent tax to LHDN. is the income from ESOS subject to tax and does it go under "Statutory income from employment" or under "Statutory income from interest, discounts, royalties, premiums, pensions, annuities, other periodical payments and other gains or profits" - any scope of getting better tax rebates in this case?

    • profile image

      Jyotshna 

      5 months ago

      Hello Mazlan,

      I have started my work from June 2017 and have finished 182 days in 2017. Continued my stay in Malaysia till February 2018.

      Had a 12 days social visit outside Malaysia.

      Now If I have to return back in April 2018, will my 2018 income tax returns will be filed as Resident ??

    • profile image

      Sathwik 

      5 months ago

      Hi Mazlan, Thank you for sharing such valuable information.

      I have a query.

      I started working in Malaysia from Sep 2nd,2017 and would be completing 182 days in March 1st week,2018. So, If I file the IT return in April 1st week then would I be eligible for the tax refund. As of now,28% tax is deducted every month from my salary.

      In Case if I am eligible for refund, how much % of tax I can expect back.

      Thank you.

    • profile image

      Nim 

      5 months ago

      Hi Mazlan,

      I am staying in Malaysia for last 5 years and paying taxes regularly as an under resident criteria. recently i switch my job to other company in Malaysia itself does new company should deduct and follow as an resident income tax slab or they will charge considering non resident to Malaysia which is flat 28%?

    • profile image

      Matilda 

      5 months ago

      Hi Mazlan,

      This is a great and super helpful article. Thank you.

      My partner has been working in Malaysia since February 2017 and we intend to stay for another 2 years. We are not married but are expecting our first child in June 2017.

      We are both Australian citizens and I have been working from our home in Johor Bahru since we arrived, but only for my Australian clients. No income I receive is derived from Malaysia.

      Because I reside here with my partner, do I have to pay any tax in Malaysia? Not sure if my foreign income is taxable in Malaysia if my partner is considered a resident as he is definitely here more than 183 days each year.

      Any knowledge you have on whether foreign income is taxable in Malaysia or not would be greatly appreciated!

      Cheers,

      Matilda

    • profile image

      B.S 

      5 months ago

      Hi mazlan,

      Thanks for the really helpfull information here.

      I have a question related with the 182 days rules.

      So if i start to work in malaysia from may 2018 (which means i will be in malaysia for more than 182 days in 2018) and i will not tied with any contract since i got permanent position in the company. Will i still charges with the 28% taxes for the first 182 days? Or i will be charges by the normal tax?

      Thank You.

    • profile image

      JS 

      5 months ago

      Hello There, If I was a tax resident in 2017 and I am leaving Malaysia before 182 days. Will the tax rate will be flat 28% for all the days I stay in 2018 or I will be considered tax resident for 2018 too ??

    • profile image

      sarah powell 

      5 months ago

      Hi,

      Started work in Malaysia on the 3rd October 2017. Paying 28 % tax through my employer.

      Do I need to register for tax in the 2017 year? Earning will be under £25501 due to way being paid.

      If I don't register does this affect the tax rate i'm on in the 2018 year. Should I now be on the lower tax rate as in the 182 Days and second year. Employer is charging the 28 %

    • profile image

      Deis 

      5 months ago

      Hi Mazlan

      I'm working in Malaysia on June 2017 and been working until now

      And I have achieved my 182 days requirement..

      One of my expat friends (he stayed here for more than 3 years already) said that 182 days only for the first year...and the 14 days social visit for the 2nd year will not reset the counter back to 0...

      is this correct?

      so in 2018 can I go make a social visit for more than 14 days without worrying about the counter reset to 0?

      Thanks

    • profile image

      Vis 

      5 months ago

      Hi Mazlan, I submitted my tax returns on 9 feb. Can i expect tax refund to be credited to my account within a month's time?

    • greatstuff profile imageAUTHOR

      Mazlan 

      5 months ago from Malaysia

      Zeeshan Khuwaja, where does your friend get this info from? I suggest you see the officer in LHDN regarding this matter and let us know the outcome pls. TQ

    • greatstuff profile imageAUTHOR

      Mazlan 

      5 months ago from Malaysia

      Omar, as described in the article and elsewhere in the Q&A, it is by end of April and if there is any refund, it will be in May

    • profile image

      Omar 

      6 months ago

      Hello Mazlan, I'd like to know when can I file my tax and how fast I will be able to get the 28% tax refund?

    • profile image

      Zeeshan Khuwaja 

      6 months ago

      Hi, One of my friend suggest that we can request for reimburse of all the 28% tax being deducted from our salary for each month once we get the resident status so does that mean all the amount which is being deducted for the initial 6 months can be reimbursed ? which mean we wont be paying any tax for first 6 month ? (if all of our tax for the initial 6 months can be reimbursed ?)

      PS : from tax i mean income tax.

      Please suggest.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      Miryam, under such circumstances, this is waived by LHDN but I suggest you visit their office for clarification and get their reply in writing for future record and proof.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      HJ, any income derived is taxable but to be sure, visit the LHDN office to explain the nature of work by the intern and money paid is salary, allowance, stipends to set off transport and lodging cost etc.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      Jaga, if you have not left Malaysia since 10th Sept 2017, then your 182 days is calculated from 10th Sept 2017, linking your days spent in 2017 to 2018.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      om, while there is a double taxation agreement between India and Malaysia, not sure if you can collect your Indian TDS in Malaysia.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      Vignesh, as described in the article, you have to be in Malaysia on 31st Dec 2017 and 1st Jan 2018 for your days in 2017 to carry through to 2018 for the 182 days calculation. In this case, you have broken the link. Hence, the clock starts again in 2018 for the 182 days and you will be paying the non-resident tax for the tax year 2017.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      Ka Kwok, not sure what's the issue here as tax submission for the year 2017 is before end April 2018 and any refund will be made in May 2018. Yes, you can file your tax return online

    • profile image

      Miryam 

      6 months ago

      Hi Mazlan,

      I started work in 10th of October 2017, and I'm planing to go back home on 17th of April 2018 for more than 14 days.

      My father has serious health issues, how can i apply that as "To seek medical treatment related to your health or your immediate family member" ?

    • profile image

      HJ 

      6 months ago

      I have an intern who intends to work for 3 months with us under the Malaysia-Australia work holiday visa programme. Is this intern taxable under this programme?

    • profile image

      Jagadeswara 

      6 months ago

      Hi,

      I have joined a Malaysian company on 10th Sep 2017. in order to complete the 182 days period and get the tax exemption, I suppose to stay in Malaysia till 10th March 2018 or 1st Jukly 2018. I have not moved out of Malaysia. Please help.

      Thanks,

      Jagadeswara

    • profile image

      om patil 

      6 months ago

      Hi Sir,

      Can I get TDS certificate in Malaysia ?

    • profile image

      Vidhuran 

      6 months ago

      Hi Mazlan,

      Many thanks for the useful blog especially for new people entering Malaysia and working.

      I have started my work on Oct 9th, I have my EP valid till 2019.

      I am paying 28% tax and planning to file the tax returns on April 2018 as I would be completing 182 days stay.

      I have traveled to India from 23rd Dec back in Malaysia on 2nd Jan.

      After reading your blog I just came to know about the mandatory stay on 31st Dec & 1st Jan for the 182 days to continue.

      Is my 182 days count is already reset??? Social visit should not exceed 14days on each visit or total of 14 days in a period of 182 days ?

      Please help me on this.

      Thanks,

      Vidhuran

    • profile image

      Vignesh 

      6 months ago

      Hi Mazlan,

      Big thanks for the wonderful blog for the new people entering Malaysia for work.

      I have a joined the company in Malaysia on Oct 9th 2017 ad EP valid till 2019. I am paying 28% tax now and I am planning to file returns on April 2018 as I would be completing my 182 days but my worry is I visited India from 23rd Dec to 2nd Jan and planning to visit in Feb for 2 days.

      Am I still eligible for resident or since I was not in country on 31st and 1st Jan my clock is reset already.

      Thanks,

      Vignesh

    • profile image

      Kris 

      6 months ago

      Hi Mazlan, good day. I started working in Malaysia June 10, 2017 (which was also the start of my non-resident deduction) and up until now February 2018 I am still being deducted for 28% tax rate, I was a bit confused as to how long will I be paying for the said tax since I'm a resident already. Also, I never went outside Malaysia since then. Appreciate if you can give me some advise on this. Thank you.

    • profile image

      Ka Kwok 

      6 months ago

      Hi Maz,

      Wish I found your page earlier, would've saved a lot of headaches.

      Anyway, got my tax clearance, now my tax return for 2017. I was told that it would be automatically paid to my bank account in two weeks. I still haven't received it and checking with any bud, they said that I'll need to file it through an E form. Is that correct? Thanks mate

    • profile image

      cay2420 

      6 months ago

      Hi Mazlan,

      Yes. My apologies. I read in the article that you prefer comments to emails after I had already sent an email. I really appreciate your time and response. It was most helpful! Have a great day.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      cay2420, was it you who submit a similar query through email, which I already replied?

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      CVK, any income is subject to tax and if there's an overpayment, will be refunded after the tax submission date of end April. 28% is applicable if you are still under the non-resident status

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      Mohamed, any income derived for any tax year is payable. So, yes you have to submit your return and if required, you have to pay the tax due.

    • profile image

      cay2420 

      6 months ago

      Was there a new law regarding tax residency passed on Dec. 22nd? I arrived in Malaysia for employment on July 1, 2017 for a year long contract and was advised to do the following residency option to link 2017 to 2018: The individual has been resident in Malaysia for less than 182 days of the tax year but was resident in the country for a total of 182 consecutive days linked to days from the year immediately preceding or following that tax year. My employer explained I could leave for a total of no more than 14 days from July 1, 2017 until my contract was over on June 8, 2018, when I plan to leave the country permanently. My employer notified me on last week that they were just made aware of a law that changed on Dec. 22nd, requiring me to stay in country until July 2, 2018. If I do not fulfill this requirement I will need to pay up to 33,000 RM in additional tax. (unfortunately staying is not an option due to family commitment). I have been out of the country for a total of 12 days since arriving (Dec 23-Jan 5). Any info/advice would be greatly appreciated.

    • profile image

      Mohamed 

      6 months ago

      Hi Mazlan,

      I have joined a company in Malaysia on 10th of July 2017. So the period of stay in 2017 is obviously less than 182 days (175 days), I have continued to stay in Malaysia in 2018. So in my case should I need to pay the tax for another six months in 2018? Please clear me out when will i get out of this 28% tax rate.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      Meena786. The best answer is to see LHDN and get them to assess your tax situation. The info you give may not be sufficient to come to the right conclusion.

    • greatstuff profile imageAUTHOR

      Mazlan 

      6 months ago from Malaysia

      No Jeanne. I suggest you talk to your HR people on this matter and get LHDN to issue MTD for your monthly tax deduction.

    • profile image

      Meena786 

      6 months ago

      Hi I want to ask about my husband who is working here since feb2017 onwards salary 5500rm plus 1000 transportation, how is income tax per year and vis a already renewed but due yo some emergency at back home we are going back and we need to cancel visa immediately so how much total income tax would be 4500rm we already submit as income while renewing the visa in December. Have any one have legal answer for this.

    • profile image

      Jeanne 

      6 months ago

      I have been working in Malaysia since 2014, it seems that my company still deduct the 28% and considers me a non-resident. Do I always need to stay 182 days every calendar year to become a resident?

    • profile image

      Cecilia 

      6 months ago

      Why can't The Bank cash the check that my friend work for and subtract the amount of the tax that need to be paid. They (Malaysian Internal Revenue ) want him to pay taxes first before he can cash his check . He run out of funds he paid part of the taxes about 85% and still they won't let him cash his check.

      Why Malaysian Government give foreigners such a difficult time

      Is there any alternative /he sold everything he had just to pay most of the Taxes and the bank is holding his check

    • profile image

      Devashish 

      7 months ago

      Dear Mazlan,

      I came across this http://www.mpma.org.my/Documents/CirAG17_11.pdf today. It would be great if you could throw some light to it as my contract does say that I am liable to work for at least an year's time. So does that mean I can get an exemption form this 28% tax for 6 months according to the appended doc.

    • greatstuff profile imageAUTHOR

      Mazlan 

      7 months ago from Malaysia

      Your stay in Malaysia is from Jan 2016 and if you qualify as a Resident, then your tax for Jan 2018 will also be as a Resident

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