Taxation in Malaysia and Rebate for year 2014

It is essential to file a tax form each year, in case the employer has not been deducting the tax correctly and you could end up with a surprise bill in the future.

If you only arrive in September 2014 your tax rate will be 26% flat - no refund and no allowances.

In 2015 year of assessment once you have completed 182 days at 25% (new tax rates are coming in for 2015) you go on to pay normal gaduated tax. When you file your tax return for 2015 in April 2016 HASIL will refund overpayment of tax.  So you have an inbuilt saving system....

You can read about this here:

http://www.mia.org.my/new/psp_taxation_ … amp;id=945

Comparison of tax rates between 2014 and 2015 for tax residents only:

There is a RM9,000 tax free amount (+ RM1,000 per child) which comes into effect for those who are tax residents.

Tax steps on annual salary are:
                                2014                                                   2015
0-5,000                    0%                                                       0%
5,001-10,000           2% (RM100)             5,000-10,000      1%
10,001-20,000         2% (RM100)             10,001-20,000    1%
20,001-35,000         6% (RM300)             20,001-35,000    5%
35,001-50,000       11% (RM1,200)          35,001-50,000   10%
50,001-70,000       19% (RM2,850)          50,001-70,000   16%
70,001-100,000     24% (RM6,650)         70,001-100,000   21%
Exceeding 100k     26%                          100,001-250,000  24%
                                                               250,001-400,000  24.5%
                                                            Exceeding 400 000  25%

NOTE: Non-resident individuals are subject to income tax at a fixed rate of 25%, reduced by 1% from current 26%.

Thanks a lot Gravitas for your detailed explanation..!!

Does it mean that for resident status i will have to stay 182 days starting from 1st Jan 2015?

Cheers,
Lokesh

But are you going to be working on a foreign worker permit?  If you are, I dont know how you will be taxed. I will try and find some more information. The bit I so far have found suggests you will not pay tax - something you could ask anyone you know who is currently working in Malaysia.

Thanks for all ur inputs on this.
Yes I am going to work on foreign worker permit. I have got EP from employer.

I find strange if I have to pay 26 % tax from Sep to Dec 2014 that is almost 4 months.

Then is it again I have to start from 1st Jan 2015 for 182 days?

The system in Malaysia requires 182 days in a single tax period (assessment period from Jan to Dec) to start with. Once tax residency has been attained, then normal taxation takes place and some tax periods can be linked together. The link I sent you explains all the different ways this is applied. 

The worst scenario is for people who cannot complete 182 days in the first assessment year they arrive. It means they have to do so in the following year, but as a tax refund is available and the employment pass is for 2 years, it is feasible to be able to recoup at least the tax overpayment for 2015.

Unfortunately, for 2014 the rules are clear - no refunds. It pays to arrive in Malaysia at the beginning of the tax year and no later than June. It is also important to be aware that during the period a person is qualifying for the 182 day presence, if they leave Malaysia for leisure purposes for more than 14 days, then they have to start again from zero in calculating the 182 day tax residency requirement.