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28% Tax deduction - 14 days out of the Malaysia

Hi,

I am currently working in Malaysia from 8th September 2017 till date and i will be working till Sep 2018 till my contract gets completed.

Currently my employer is deducting 28% tax from my salary. By March 10th i will be completing 183 days and i will be taxed as a resident from March.

Unfortunately as my mother passed away, i went to India (home town) for 15 days (21st Oct 2017 to 5th Nov 2017). And i stayed for more than 14 days in 182 days period. Is this trip will effect my Tax returns? I am so much worried whether i can get total Tax returns in 2018 or any deductions? Because my pay is only RM 3500. Please provide me the information to claim my tax returns. Do i need to submit any documents to LHDN?


Thanks in Advance.

It does not work like that. You have to be 182 days in a tax year (January to December)

So you will be 182 days in Malaysia some time in June/July for 2018

If you have been outside Malaysia more than 14 days then you can still link 2017 to 2018 and get a refund of the difference between resident and non-resident rates.  This would be because you did not take the 14+ days during 2018.

You do need to submit a tax return to LHDN for 2017 in the next month or so (March/April 2018)

You won't get the refund until you have completed your tax return for 2018 in March/April 2019. They can then see you linked the two years successfully according to the rules.

Thank you so much for the very quick reply.

I am sorry to ask you one more clarification that, do i need to wait until 2019 for my tax returns? If i exit Malaysia in 2018 Sept (as my contract will be completed), do i need to come back Malaysia in 2019 again to claim my Tax returns? Please clarify me.

Thank you so much in advance.

You can do your tax clearance when you depart in September 2018. They will process any refund due to you. Do it at least 4-6 weeks in advance. Employer usually withholds your last salary until TC is done. They have to file a Leavers Certificate for you with LHDN.

It's just not possible to apply for refund immediately when qualified as tax resident. The only times are (a) annual tax return or (b) leaving Malaysia.

Do keep all records such as boarding passes.

Thanks a lot for the very quick reply.

I forgot to ask you one more clarification that currently my employer is deducting 28% tax (Non Residential Tax) amount from  Sept 2017 and i hope it will be till Feb 2018 (6 months). And i hope i will be charged at Residential tax rate from March 2018. As my pay is only RM 3500 can i expect tax free salary from March 2018?

Thank you so much in advance.

Please read what I wrote - you will be deducted 28% until June/July 2018 because qualification to be tax resident is per tax year (i.e. Jan-Dec)

1. You are NEVER tax free (you just pay lower resident rate)
2. You will only be tax resident in Jun/Jul 2018 not before.
3. You will get any overpayment of tax September 2017 to July 2018 refunded at tax clearance when you are preparing to leave.

Thank you so much.

hi

Right Now How much tax deducted from your salary(3500).Because I got same offer so really need to now what I get in hand salary after deduction.

thanks

3500 x 28% = 980 (tax deducted per month)
i.e. 2520

HI gravitas ,

its looks like u know a lot bout tax , 1 thing is bothering me , is the 14 days outside malaysia is accumulate or 14 days in a straight , could u help me ?

because i have get lot info that making me confuse , i work in KL but i surely have many project thats force me to travel once a month to diffrent countries .

thanks in advance

Its cumulative. Its only personal travel (holidays) not professional absences.

Hi Gravitas
I’ll be in Europe for 16 days on personal and business travel.
How to prove that I use 6 days for business? Is it ok to provide a letter of prove from my company?
Many thanks
Adrian

How to request Resident Certificate as Indonesian ?

Go to your tax office with passport.

There is an online system - http://www.hasil.gov.my/bt_goindex.php? … 14abc4ce76

So I can just request after 6 month ? I read for Indonesian come with special form, is that form possible available on lhdn ?

That is the whole point of the Certificate of Residence. It confirms you have become tax resident after 182 days. Check with LHDN. The form is available online. http://www.hasil.gov.my/bt_goindex.php? … ;bt_sequ=1

Hi there, I’m very concerned if I would get my money back.

1. I came to Malaysia on July 15 2017 ( 1 year work contract )

2. I left the country in 2017 for 2 days.
( left 1 sep back 2nd sep is that consider as 2 days? )

3. I left the country in 2018 for 12 days.

4. I have summited M form already in April 2018

Question is

-would I get my tax back in 2018? And do I need to summit any more form?

- How do you count the days let’s say l left on 20th of Jan and back on 28th Jan so is that considered 8 days in total?

Thank you so much.

You only count the days where the whole of the 24 hrs you are outside Malaysia.

The absence in 2017 does not count.

Absences in 2018 need cumulatively to be 14 days or less.

You need to be in Malaysia for 182 days in 2018 before you become tax resident and income tax rate become tax-resident rates. Applying for a Certificate of Residence confirms this to your employer.

If absences in 2018 are 14 days or less, then tax years 2017 and 2018 can be retroactively linked.

However, no refund of overpayment of tax until filing annual tax return for 2018 in April 2019 or leaving employment/country permanently if earlier.

Thank you so so much.

So just to make sure i understand correctly.

In year 2018,  if I left Malaysia in July 15 2018 due to end of contract. I wouldn't be able to get my 28% expatriate tax that i paid in 2017 back? 

I went in the Hasil office a month ago. One guy told me to go there again in the beginning of July for what he called a " Re-Assessment" with a copy of passport an the M form completion printed.

So does it mean the rule has change? Or I still wouldn't be able to get my money back anyway?

" However, no refund of overpayment of tax until filing annual tax return for 2018 in April 2019 or leaving employment/country permanently if earlier" <<<<<  Are you saying then that i can get the 28% tax i paid of year 2017 if I left the country permanently in July 2018?

I haven't counted the number of days until 15 July. Yes, if you leave your employment after 182 days plus your 2018 absences (e.g. 182 + 12) you will get tax refund for 2017 and 2018. This is because for 2018 you have become tax resident and have not broken the 14 day rule for maximum absences so have linked tax year 2017 to the following tax year.

Thank you so much!

Hi there,

How much is the tax refund an individual gets (in %) after completing 183 days?
I hope its not entire 28%!

Thanks,

The refund is the difference between resident and nonresident rates. Resident rates depend on salary.

Tax is graduated with higher percentage only paid on higher portion of salary plus TR status gets a RM9k tax free allowance.

Overpayment is refunded when annual tax return is filed in April following year

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

This link enables you to work out annual tax. Based on 12 x monthly pay, minus 9k tax free allowance, that figure is what taxation is calculated. From the tax scale you will see the different percentages for each strata of salary (increasing with rising salary).

If not working 12 months a rough estimate is still possible by working out the monthly tax deduction i.e. annual tax divided by 12. Then multiply by the number of working months.

Hi Gravitas,

I hope you can help me for confusion.

As you know, to become non-resident malaysian to resident malaysian. It would take 182 consecutive days ( 14 days or less holidays )

Let assume, a person starts working from july 15 2017, having couple trips to his home town which will count 6 days absence..

On Jan 20, 2018. on 182 days with accounted of 6 days absence. he will become resident of malaysia.

From feb 2018, he will charged tax as the resident of malaysia.

Question : On Apr 2018, The 182 days will completed with 2017 and 2018 linked years.

Data :

Date of arrival to malaysia :  July 15, 2017
182 completion date : Jan 31, 2018 ( Included of 6 days absence)

1) From feb 2018, Tax will be charged as normal as resident payer ??

2) While filling tax for 2017 year on Apr 2018, 182 days rule get completed is considered or not ?

         if considered, excess tax amount will be repaid on apr 2018 ?? 
         if not considered, when excess tax amount will be repaid ( apr 2019 - filing 2018 tax ) ??

Hope you understand my question

Thanks

Tax residency has to be achieved in a tax/calendar year (Jan-Dec).

No-one can become TR in January.

With arrival on 15 July 2017, TR can only be achieved after 182+ days all days being in 2018.

The linking of 2017 and 2018 is achieved after 182 days in 2018 with max 14 days absence (absent days are then added to 182 days so TR takes a little longer, e.g. 182+14=196 days)

After 182 days in 2018 then TR deduction rate starts to be made (after getting Certificate of Residence from tax office)

Any refund* for 2017 and 2018 is onlu paid after tax return submitted in April 2019. *difference between resident and non-resident rates

A tax return for 2017 was due to be submitted by 30 April 2018. It would be a Non-Resident return. Form M - http://lampiran2.hasil.gov.my/pdf/pdfbo … 2017_2.pdf

Hello
My friend have problem with tax. So after his situation  I know about tax. Hope it's helpful you.
My friend work in August 2017 and he decide to resign in April 2018 ( more than 182 days if counting from August to April . Every month he needs to pay 28% tax. But after that any happen with him like funny story I have ever heard.
Tax office tell him 
From August to end of year : he not enough 182 days. He's non resident
From January 18 to April when he decided to resign he not enough 182 days. So he's not resident too.
So from August to April he is not resident. So they charge him 28% per month (from August to April due to non resident tax). And don't get any refund. He need to pay more than 8k for tax.
So  I know that they don't count from the day you work until the day you end contract. They count following your financial year. So if you have 10 day move out in 2017 and 5 days move out in 2018 .it not affect 14 days. Because they count financial year.
And 2017 (from time you start your contract to end of the year)  your resident but 2018( January to the time you end contract)  you are not resident. End of the day you still resident and they will refund tax for you.
Hope it's useful information for you.

Hi sorry i still have confusion.

You said that he didn't get tax refund? But the end of paragraph you get tax refund?

So did your friend get tax refund after all?

I kinda have same situation and some source says 182 +days you leave and some source says 182 and within this 182 days you can have 14 days leaving the country.

So I don't know if i would get tax refund back.

It's not "within this 182 days you can have 14 days leaving the country"

Any absent days are added to 182 to find the qualifying date for tax residency.

However, more than 14 days means the tax years cannot be linked.

I also disagree with the statement that the "day count" is done over 2017 and 2018. The day count is only relevant for 2018 to link tax years. Page 6 explains https://www.pwc.com/my/en/assets/public … ooklet.pdf

Secondly, any reimbursement of overpayment of tax for linked years 2017/2018 would not be due until after the Annual Tax Return for 2018 has been filed (i.e. April 2019)

Edited*  So let's say if I joined in 1st July 2017 and my contract end in 1st July of 2018. Within that one year contract, it then means I'm not allowed to leave the country at all in order to get my tax refund?

Tax years are January-December.  You would need to have been in Malaysia for 182 days in 2017 to be tax resident. By filing your 2017 tax return in  April 2018, any overpayment of tax for 2017 will be refunded.

Tax year 2018 you continue to be tax resident and not subject to 14 day rule (unless you failed the 182 day count in 2017)

The 14 day rule* is ONLY relevant to link a tax year where a person has not been in Malaysia for 182 days (e.g. due to start date) to the following tax year, so that both years classify as tax resident (retroactively assessed - because the tax office does not have a crystal ball).

*personal absence (e.g. holiday)

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