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Regard to 183 days for tax residence in Malaysia

Hi,

I'm currently working in Malaysia from August 1st 2017 untill now and to be continue working in next year(2018) also.

But that time I had single entry visa and entered to Malaysia on 24th June 2017 . Then I spent 1 month for waiting my company to apply multiple visa working and only started working from August 1st 2017.

Kindly help me to clarify how to calculate for 183 days as resident in Malaysia? Should be calculated from 24th June 2017 (the day I entered Malaysia) or August 1st 2017 (the day I started working and paid for tax) ?

Thanks in Advance.

Date of the EP is the relevant date (1st August 2017), but of course you cannot be TR in tax year 2017 but will still need to qualify in tax year Jan-Dec 2018. Do remember leisure absences of more than 14 days stop the qualifying period, restarting on first day of return thereafter. Therefore, be mindful to link tax year 2017 and 2018 for maximum, retroactive TR benefit.

I will be from 1 st aug 2017 now in April you do you IT returns and based on your stay in malaysia they will calculate the tax and if stayed more than 182 days in current financial year they will refund your amount which employer deducted @ 28 %

While filling income tax online if you have declared any investment or etc, its better to visit in person and fill income tax so they can collect all the proof mentioned will filling IT return so they can process your refund fast.

Thanks so much for ur quick reply! Can u help me to clarify 3 more issues below?

1. Just want to confirm that, I need to stay in Malaysia more 182 days  in 2018 for qualifying resident. Is it correct?

2. And for leisure absences of more than 14 days, it means every period I cannot be outside of Malaysia more than 14 days OR the total absence of all trips cannot be 14 days.

For example: from 1st Jan 2018 to 31st July 2018, I have 2 times travelling and let say each trip lasts for 10days. So it will not stop the qualifying period because it will not exceeds 14 days. Am I right?

3. From 1st August 2017 to 31st Dec 2017, I tried to count and not enough 182 days. So means in April 2018, I still cannot get refund of amount which employer deducted @ 28 %. But can let me know when I get back this tax refund, after July 2018 ( when I finish 182days in 2018) or I need to wait until April 2019?

1. Yes
2. 14 consecutive days will break the qualifying count of days present
3. After July 2018 or April 2019

In relation to the 28%, do they continue to collect that amount until I qualify in 2018? I have contract for the entire year,  and if so, it would seem I would have nearly enough withheld to cover 2018 taxes by July.

Tax years are dealt with separately. Qualifying is therefore on an annual basis.*

After the 183 days the rate reverts to the tax resident rates. Any overpayment is refunded when a tax assessment form is completed. This is usually done in Feb/Mar 2019 (i.e. after the tax year is complete) but I believe can be submitted earlier or if leaving the country. But tax by law has to continue to be deducted each month by the employer.

*Page 6 (connecting tax years) https://www.pwc.com/my/en/assets/public … ooklet.pdf

Someone can help me some questions?
- 182 days counting for a tax resident will be restarted each year, right? If I work in Malaysia from April 2018 to March 2019, I will qualify 182 days for 2018 but not enough for 2019 if it is counted days again by each year. That means I have to pay 28% for 3 months of 2019?
- in my situation, I understand that i will refund income tax of 2018 by January 2019, right? But all will be refunded in the same time or by each month? And who will be responsibility for it, company where I work or tax office?

Page 6 explains how to link years to remain tax resident in 2019.
https://www.pwc.com/my/en/assets/public … ooklet.pdf

The tax office LHDN adjudicates tax refunds. At the end of the contact the company completes a "Leavers" form to advise LHDN. Sometimes a company will withhold the last months salary pending report from LHDN and adjust the last salary payment accordingly. Otherwise the overpayment is repaid by the tax office.

For year of assessment 2018, you need to complete a tax return and any over payment of tax returned in about March/April. In your case probably do it at the leavers stage. I am not sure if it is still possible to get the overpayment paid out once the 182 period is completed i.e. July/August 2018 - worth checking this. But tax deductions continue to be made after qualifying as tax resident, ONLY NOW USING the graduated rates.

Just to make it clear any refund is just the difference between the flat rate 28% non-tax resident deduction and what would have been deducted if on the graduated steps and allowances for a tax resident.

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