After 6 months, residence tax rate?

About 18-20% is the usual income tax rate. The flat 26% rate is only for people who are employed in Malaysia for less than 183 days in a calendar year i.e. arrive after about July 1st. The difference in tax rate is not refundable. Each calendar year is a new tax year.

Gravitas, the rules have CHANGED!

At least per our tax people. Our new staff are angry as it appears you only are resident if resident for:

1 Jan - 30 Jun
or
1 July - 31 Dec.

So if say you arrive in August. You pay 26% tax until 31 Dec and NEVER can claim it back as not resident until end 30 June the following year. That is the interpretation of our local tax office. New rule came in recently - took our HR by surprise as well.

Anyone else come across this?

Its true, less than 183 days employment per calendar year means paying 26% flat rate (no refund). If you leave the country for more than 11 days in first 183 then everything returns to ZERO. Rate after 183 days is the same for everyone i.e. the standard tax rates. However, it seems that foreigners cannot claim relief for things like health insurance for self and parents......

When did it change? Last year rules were very different, You were resident after 183 days and could claim back. Never saw any news on this?

What seems to have happened though is you arrive 2nd Jan and you can't claim back tax for 2nd Jan to 30th June either! All our staff claimed back successfully. Now they can't!

Actually just realised why some expat companies are not paying expats in Malaysia but back home until here for a full tax year. This change means Malaysia loses tax! They must have known then. Wondered why I met so many not being paid locally who arrived since Jan!

So please answer my question.  How much tax will I be asked to pay after June 30?  Between 18 to 20%? 

Also one quick question about health insurance.  According to Malaysia new law in 2011, all expats should have health insurance covered by company.  What kind of health insurance are we talking about?  For instance, my company only pays up to rm 100 for any doctor visits per month which is literally "nothing".   Does this mean I am still under health insurance policy accordingly by Malaysia new law? 
I am slowly looking to buy a private health insurance.  Any recommendations for me? 
Many thanks

Yes you will pay around 18-20% as long as you are resident in Malaysia for more than 183 days. As this is impossible  after 1 July it is a flat rate of 26% and non-refundable. You will need hospitalization medical insurance. It is separate from primary health care coverage (which is not worth having as it is so cheap to visit a doctor, but medication is expensive. The main reason is that without insurance for hospital treatment the patient is asked to pay a deposit before being admitted of up to 20% of the anticipated cost of treatment or a flat fee if unknown. This can be claimed later from the insurer, but having ready cash of anything from RM10-25k is not always a possibility.

Here is a link that shows the exact income tax breaks:

HASIL - Personal Income Tax Brackets

Is the tax is 26% for everyone for firt 6 months.how much is the maximum tax for an expat earning 70000 per annum

According to the HASIL website you should be paying RM3,800 or 19% of your annual salary after deducting RM9k tax relief

Here is a link to the HASIL website which shows details of the % tax on different incomes:

Income Tax in Malaysia

and here are details of the tax relief:

Tax Relief in Malaysia

As you can see, there is RM9 000 that is earned before tax starts to be applied. That needs to be taken into consideration when looking at the % because RM9k needs to be taken off your annual salary and then the tax is applied and taken off earnings each month. The word (Limited) has never been explained, but from what I can see foreigners cannot claim any of those deductions.

The 26% is paid only if the person is classified as non-resident i.e. has been working in Malaysia for less than 183 days per calendar year.

So if a person arrives in July, that year until 31 December they have not been here long enough to pay the standard tax rates mentioned above, so they are charged a 26% flat rate i.e. THERE IS NO REFUND.

Hi all, any updates on this post? I went to the LHDN office at Menara Olympia, near Masjid Jamek this morning, the Tax officer told me that I can claim my 25% income tax back. I came to Malaysia in Middle of September, started working on October and have been staying here till now, so I have paid 3 months 25% tax/each month -a big amount of money. I asked them if I can claim this money back, they told me CAN, but when I asked how and when, they cannot answer me. They told me to wait after 30 days and come again to know the answer as I just newly submitted my application for tax refund!!!

I hope to know more updates on this issue!

can we claim the tax which i have paid in 6 month.
i mean is it refundable once you become mylasian residence..
kindly help..

You can claim difference between resident rate and 28% non-resident flat rate

You mean I will be able to claim all the amount which I have paid for 6 months
.I will be paying 28 percent of my salary till 6 months.
After 6 months the tax which I have paid is refundable...
Or
How much is refundable???
Plz help me with this.
Can somebody explain it in details...
It's little urgent.
You can reach out to me on -+91-9742186801

You don't get all the tax you paid at 28% back

https://www.pwc.com/my/en/publications/ … oklet.html

Normal tax rates are shown in this booklet. They are on a rising scale. This means parts of annual salary are taxed at low rates but higher parts are more highly taxed.

Income tax is always due on earnings. Becoming tax resident just means the flat rate of 28% is replaced by the normal rates.

If you work out your annual salary and find it on the table in the booklet you can see the total tax due per year (divide by 12 for monthly deduction).

Refunds are just the amount overpaid being returned.

Tax years are January to December so 182 days are required in each tax year in order to just have to pay the lower resident rates.

Thanks..
But still I have one doubt..
The amount which I have paid for 6 months...
How much I will be able to claim.
Suppose I am paying 2600 rm tax per month .
My salary is 7000 rm
how much I will be getting back once I become mylasian residence
2600 RM tax which I am paying every month is refundable
How much I will be getting back that's my question...

The 2600 you are paying monthly is not refunded.

Check the booklet to work out the difference between resident and non-resident rates.

Your annual salary will be 84,000 (12 months x 7,000)
You will get a 9,000 tax free allowance once you are tax resident.
This means your taxable income will be 75,000.
Look at the line which says 70,000 on the table
Tax due is in the right hand column
To this you need to add 5,000 @ 21%.
That will then give your annual tax due
Divide by 12 to find monthly deduction.

You mean for starting 6 months they will deduct 2600 per month from my salary which is 7000 so it will be 4400 RM for 6 months
And from 7 month onwards  I will get 9000 RM
For how long I will be getting this salary.
Are you sure about it..

The calculation is actually RM 7000 minus 28% (= RM 1,960) = RM 5,040 after tax salary.

When you eventually become tax-resident it certainly wont be 9000 (because that is MORE than your monthly salary).

There will be a DEDUCTION OF TAX EACH MONTH from your 7000 salary. That means you will always take home LESS than 7,000 per month.

Here's the link again https://www.pwc.com/my/en/assets/public … ooklet.pdf

Here's what you do

Your annual salary will be 84,000 (12 months x 7,000)
You will get a 9,000 tax free allowance once you are tax resident.
This means your TAXABLE income will be 75,000.

In the TAX BOOKLET - Look at the LINE which says 70,000 on the table ON PAGE 7
Tax due is shown in the right hand column
You need to add 5,000 multiplied by 21% (because your salary is 75,000).
Add those 2 figures together and it will give your annual tax
Divide that figure by 12 to find the amount of the monthly deduction.

Just to make it clear - you will have the flat rate 28% deduction until July 2019 (i.e. 182 days in 2019) as that is the earliest date you can become tax-resident.

You will also have the 28% flat rate deduction for the rest of 2018 tax year i.e. until December 31st