Am I a Malaysian tax resident?

I see you are a Malaysian citizen. That makes a difference. I think you may at least have to declare your offshore income in a tax return if it is a certain level.  I seem to remember on the annual tax form there is an area asking about offshore income. The HASIL website has details.

http://lampiran.hasil.gov.my/pdf/pdfam/01_2017_2.pdf

From http://www.hasil.gov.my/bt_goindex.php? … ;bt_sequ=1

Take a look at the first link above as it gives the figure above which you need to declare for tax.

If you don't have an employment contract perhaps you should be setting up a sole proprietorship company in Malaysia to defray expenses? http://lampiran.hasil.gov.my/pdf/pdfam/03_2017_2.pdf

Thx for the advice. I appreciated it very much

Hi

Am I a foreign tax resident here in MY being from AU but not contracted to a MY business as a freelancer.

Just received this from my credit union bank in AU today...

Are you a foreign tax resident?
Our records show that you might be a foreign tax resident. We're now required to identify members who are foreign tax residents, their country of foreign tax residency and Foreign Tax Identification Number in line with recent changes to laws* designed to counter global tax evasion.

While I've been in MY for >180 days. Only work has been from reviewing work send from the UK but paid into my Maybank account. Only about RM since Jan this year.

3 years ago when employed in MY I paid tax.

Do I need to re-register here in MY? Or no need and not classed as a foreign tax resident?

I think you retain your tax number always so you do in fact have a Malaysian one. I think you may be tax resident in MY because you are not under contract to a foreign company. So you are in effect self employed in Malaysia - reinforced because you are paid into a MYR local account. But if you earn MYR 34,001 per annum (there is also a married rate - check the link below), then you don't have to register to pay tax anyway. That is the tax threshold. http://lampiran.hasil.gov.my/pdf/pdfam/01_2017_2.pdf

Thanks will check this out.

Also I've never used the online tax form. Is it easy or better to find an accountant to assist?  When is tax returns due and is it by calendar or financial year?

Tax return for 2016 was due by April 2017. An accountant is a good idea as I think the online system is not in English. Tax forms have to be submitted in BM too. Everyone is getting the kind of letter from their banking institutions around the world asking for all tax numbers.

Wow so not just Australia. I gather that they wish to access bank accounts in other countries re: tax evasion

Malaysia has signed up to an information sharing protocol starting this or next year. (Malaysia will first report in September 2018) Double taxation Treaties are available if necessary. https://www.oecd.org/tax/automatic-exch … tories.pdf I read that Malaysian banks will be reporting on bank accounts held.

Hello Guys,
I need your help to figure out a number of points regarding the income tax in Malaysia since I will be relocating for a new job in Maersk group in Johor soon.
My start date will be 1st Dec my salary is 6500 MYR and I have been told that 28% of salary will be deducted for the first 182 days so my questions are

* if I should start 1st Dec so the six months will be ended in May or June?
* after the six months the salary deduction should be max. 2% right? and I will be treated as a resident going forward and will be able to leave the country for more than 14 days whenever I want and when I come back I will still be treated as a resident with the 2% tax deduction?
* Do companies make the tax
deduction from their side or do they gave my the whole amount and I then should file the taxes with the authority by my self?

*what exactly the amount that I am entitled to refund if any and when I can get it?

Thank you so much for your help!

The Tax year in Malaysia is Jan-Dec and a person when they start working here should aim to qualify as TAX RESIDENT in the first full tax year. So it is 183 days in 2018. (Obviously it is not possible to become tax resident for tax year 2017*)

The deductions are done in tranches which means everyone pays the same % deduction on lower tranches. But people whose annual salary is higher, end up also paying higher % on just the part of tranches where some of their salary falls

Page 7 explains this system. https://www.pwc.com/my/en/assets/public … ooklet.pdf  So your annual salary is RM78000 (You get RM9k tax allowance once qualified as TAX RESIDENT so the highest % you will pay on the upper tranche is 16%  (to get monthly tax deduction work out the annual and divide by 12).

Companies are required to deduct the tax. It can be corrected (+/-) when the annual tax return is submitted by you in March the following year.

Personal absences of more than 14 days during the initial qualifying period (183) mean continuity is broken - so this is important to note, so you do not end up continually paying 28% flat rate deduction. *Page 6 explains how to link 2017 to 2018.

There may be some slight adjustments in the budget for fiscal year 2018 and these will be announced.

Thank you so much I really appreciate your help 

Hello again,
I have been browsing on the income tax in Malaysia and just to confirm on my understanding that after I spend the 183 (six months) in Malaysia which will be only applicable in the year 2018 I will be a resident going forward even if I had a vacation and had to leave the country for more than 14 days meaning starting July 2018 I will be treated as permanent resident.

The 183 days (six months) is a one off requirement that once done by an employee he/she should earn the tax residency and nothing should invalidate this even leaving the country for more than 14 days?

No - you would not be a "Permanent Resident" of Malaysia. That is an immigration status, not a tax status.

You could be "tax resident" if you are on a Professional Employment Pass and paying income tax.

Yes, from July 2018 and for the rest of the tax year you can leave the country for periods of more than 14 days for personal reasons.

After initially qualifying as tax resident in 2018, then tax residency can be maintained according to Page 6 of the PWC guide mentioned earlier (linking tax years)

Actually, the rule for your one month (Dec 2017) is that your income will not be taxed because employment has been exercised for "less than 60 days in a year" http://lampiran1.hasil.gov.my/pdf/pdfam … 3adcd0deaf So I think you could take an extended holiday say over Christmas and the New Year and your tax residency count of 183 days would commence on the first day of the tax year 2018 when you start working.

If you take a look at Page 8 of the booklet, it states that Knowledge Workers in Iskander working for designated companies ONLY pay 15% tax. I would imagine these are start-up large investors whose tax break for opening in Malaysia is to be able to offer attractive taxation terms to potential employees. I don't know if Maersk is on the list of companies.

In your case you will only be in Malaysia in December 2017. But people who start working say August to October any year, it makes a big difference to their overall tax payments if they can link the previous year to a full tax resident year.....

The 14 days is just the length of time the tax authorities use to determine "consecutive presence" in the country. The importance is that by not breaking the continuity by more than the allowed 14 days, then non-resident 2017 tax year can be linked to resident 2018 tax year. This means that, retroactively, the difference between the non-resident and resident rates charged in 2017 can be refunded i.e. whilst non-tax resident, the 28% flat rate tax deduction is applied to earnings.

The advantage of becoming tax resident and linking 2017 to 2018 is the tax rates that will be applied to the whole period is the tax resident one i.e. the tranche system with different rates for each proportion of annual salary.

For anyone who wants to read a series of quick guides to Malaysian taxation, I can recommend the various "Tax Brochures" found on the tax department's web page http://www.hasil.gov.my/bt_goindex.php? … ;bt_sequ=1

Can't help commenting on the freudian nature of the name for the Malaysian tax system - HASIL- [ hassle :-) ]

I tried to read a lot about income tax for a foreigner but still confuse something. I just plan to live in ML 1 year from April 2018 to March 2019.

1. I will qualify 182 days in oct 2018, that means from oct to dec 2018 I just need to pay income tax as a tax resident. And I expect all tax refund of 2018 from April -September 2018 will be refunded in January 2019 if I complete all related papers. Is it right?

2. For next year (2019), from January to March, it is a new tax year, so I'm not sure how much I need to pay for the tax, still be the tax resident or must pay 28% again? Some people mentioned about tax of linked year in some documents but I don't understand much.

1. Yes, you will become tax resident in about October 2018 as long as you don't leave the country for social enjoyment reasons e.g. holiday of more than 14 days. The refund will only be the difference between the 28% non-resident rate and the resident rate (graduated steps i.e. paying high percentage of tax on just the upper levels of annual salary).

Refunds are usually processed in March/April 2019 (possibly earlier if tax office accept application once tax resident). You have to complete a 2018 tax return to get refund.

2. 2019 you will continue to pay tax-resident rate as long as you don't leave (temporary absence) the country for social reasons for more than 14 days. This is because you are leaving in March so before you are here for 182 days in 2019. So you need to link the tax years by limiting social absences. So, for example do not take a 3 week holiday anytime.

Before you leave the country you do your tax clearance for 2019.

Dear Gravitas,

I am currently working in Malaysia and am seriously considering to retire here in a couple of years.

If I apply for the Malaysia My Second Home program,  What taxes would I be liable to pay? I have investment income from Switzerland and Malaysia and also residential rental income from Canada where my passport is from?

If the  issue is too complex - could you recommend a qualified tax expert based in KL?

Thanks for any information you may be able to provide,

Cheers

Malaysia does not tax offshore income. You would need to check what the Double Taxation agreements say about your income. Its more to do with being non-resident. The MM2H qualification levels are looking like going up significantly. The perks have also been eroded.

good evening , i'm a new foreign worker ,
i have a question for you if you may,
my question is this : according to my reading on the Malaysian tax system , do my company have the right to do a monthly tax deduction from the salary ?
or am i the responsible of doing my own taxes ?
because according to Malaysian tax codes if an individual is in Malaysia for a period greater or equal than 182 days he is consider to be a resident and therefore i wont be taxed at a rate of 28% because between the starting date (25/06/2018) and the end of the year (31/12/2018) there is 190 days ?
thank you in advance
best regards

chebahi wrote:

my question is this : according to my reading on the Malaysian tax system , do my company have the right to do a monthly tax deduction from the salary ?

**Legally they MUST make the monthly deduction and pay it to LHDN

or am i the responsible of doing my own taxes ?

**You are responsible for filing your Annual Tax Return.

because according to Malaysian tax codes if an individual is in Malaysia for a period greater or equal than 182 days he is consider to be a resident and therefore i wont be taxed at a rate of 28% because between the starting date (25/06/2018) and the end of the year (31/12/2018) there is 190 days ?
thank you in advance

**Any overpayment of tax will be refunded either when the Annual Tax Return is processed or when leaving employment/country permanently. LHDN can only see you have been in the country for 182 days retroactively

best regards

thank you