28% Tax deduction - 14 days out of the Malaysia

Think you should appeal to LHDN on 14 day rule basis to link 2017 to 2018

Don't pay anything to employer. Your tax situation will come up with the processing of a new EP in December.

Thank you very much for ur updates  ..its help me a lot  i have sent all required document to LHDN office to clearify everything ...

Hi Gravitas,

As my visa get expired on 7th Sept and my company applied for special pass till 6th Oct (30 days) due to no Visa quota available with them. As promised they will apply for new visa in Jan 2019 once they get quota. I must leave the country by 6th Oct.

For tax returns claiming process, I have submitted my CP21 form, EA forms, PCB forms and Tax borne letter along with the required documents to LHDN 3 weeks ago.

When can i expect the tax return amount in my bank account?

I received a cheque sent through the mail. I think this is the normal way if you do not have an online tax registration account i.e. through which you normally submit your annual tax returns.

I don't see if you visited LHDN and submitted everything to a tax officer. If so they would usually ring you when everything has been finalised.

There have been so many public holidays recently that delays are inevitable. More PHs ahead as well.

I don't know how long you have been in Malaysia, but there would not be any refund if 2018 is not the first full tax year i.e. the correct amount would normally be deducted by your employer each month. However, as it's a tidying up of your tax affairs, it will look at your tax record since you arrived.

Thank you for the information.

I will visit LHDN again to know the status.

Hi,

You seem to really have this tax thing down.

We arrived on July 2nd 2018, so I only have one day I can be out of Malaysia to obtain my tax residency status (Here for 183 days if we don't leave). That being said we were looking to go to Sabah for 2 weeks for Christmas, and then after January 1st we can go freely as we will definitely be in Malaysia for over 182 days in 2019. My question is, is Sabah still considered Malaysia for tax purposes? We've heard different responses on this so we aren't sure, but by December we will have explored most of western Malaysia so we had planned on checking out that area.

Any help would be appreciated or a website/contact of who to ask if anybody knows!!

Thanks in advance!

jessml :

YOU NEED A LONG TERM VISA TO BECOME TAX RESIDENT. IT IS NOT POSSIBLE ON A TOURIST VISA

We arrived on July 2nd 2018, so I only have one day I can be out of Malaysia to obtain my tax residency status (Here for 183 days if we don't leave).
**The count for the 182 days will start on the first day you are earning a salary (tourist visa does not count - i.e. you wont get a Certificate of Residence from the Malaysian Tax Office).

That being said we were looking to go to Sabah for 2 weeks for Christmas, and then after January 1st we can go freely as we will definitely be in Malaysia for over 182 days in 2019.
** If you take 2 weeks in Sabah it is still counted as being in Malaysia

My question is, is Sabah still considered Malaysia for tax purposes?
** Yes

We've heard different responses on this so we aren't sure, but by December we will have explored most of western Malaysia so we had planned on checking out that area.
** If you are on a tourist visa you can probably only stay 90 days. It may be possible to get a 30 day extension in peninsular Malaysia but immigration is different to SABAH. You would need to check how long you can stay in Sabah on a tourist visa if you have entered Malaysia on the peninsular.

Any help would be appreciated or a website/contact of who to ask if anybody knows!!

Thanks in advance!

Yea not on a tourist visa or I wouldn't be able to work or even need to worry about the tax residency part anyways. Plus seeing I got here beginning  of July I wouldn't be able to stay until December anyways as that's well past 90 days. My company doesn't allow us to come over until we have our work visa approved. But thanks for the information!

Actually people do think that just being in Malaysia for 182 days as a tourist makes them Tax Resident.

From your post it was not clear if you were working or just touring long term as the emphasis seemed to be on seeing different parts of Malaysia.

Income tax is calculated from the first day you earn an income (which is unlikely to be arrival date). Do check you still have 182 days in Malaysia from that date.

Gravitas,
I have arrived Malaysia on Aug 6th 2018 and i have 1 year contract ends on July 2019. As per the tax process i should be  in Malaysia for 182 days to claim the tax returns.

I already left the country on aug 7th 2018 and returned on aug 12th 2018 (it count as how many days)

By assuming the above as 4 days i plan to take go out of Malaysia from dec 23rd and to return on jan 3rd (assuming it as 10 days).

Total = 4 +10 days =14 days out of malaysia.

Please confirm if the above is correct. I am hearing that the day which left also counted. Please clarify if you have any official document for it .

Also please confirm i will be a resident from Feb 18th 2019 , (182+14 days =196 days)

And in june 2018 , will i be able to get my tax refund

seenuk :

I have arrived Malaysia on Aug 6th 2018 and i have 1 year contract ends on July 2019. As per the tax process i should be  in Malaysia for 182 days to claim the tax returns.

I already left the country on aug 7th 2018 and returned on aug 12th 2018 (it count as how many days)
** You count the full days you were outside Malaysia i.e. when you were not in Malaysia at any point during the 24hr of a day.

By assuming the above as 4 days i plan to take go out of Malaysia from dec 23rd and to return on jan 3rd (assuming it as 10 days).

Total = 4 +10 days =14 days out of malaysia.
**You actually have 12 days in Tax Year 2018 and 3 days in Tax Year 2019

Please confirm if the above is correct. I am hearing that the day which left also counted. Please clarify if you have any official document for it .

Also please confirm i will be a resident from Feb 18th 2019 , (182+14 days =196 days)
** No you have to be in Malaysia for 182 days in EACH TAX YEAR (Jan-Dec)

And in june 2018 , will i be able to get my tax refund
** No

** You will first become Tax Resident after you have been in Malaysia for 182 days in 2019. Because you will take 3 days holiday, it means you need to add those 3 days because you were not in Malaysia. That means 182 + 3 days = 185 days. This would make your QUALIFYING date around 5-6th July 2019

**You will get your tax refund for 2018 and 2019 when you leave in July 2019.

Thank you for your reply.

if i leave sep 6th at 6 am Malaysia and arrived Malaysia Sep 8th at 8 pm.. So in this period it count as 1 day right.. Please correct me if I am wrong..

Can you please confirm since I will not be out of Malaysia for 14 days in 2018, can't 2018 days linked to 2019 to become tax resident??

Yes it counts as only one day.

The only way to link tax years in your case is to be in Malaysia for 182 days in 2019 and then link* back to 2018 (because there are not sufficient days since your arrival in August to become tax resident for tax year 2018)

It actually has ZERO effect how many days you are outside Malaysia during 2018 - as you simply can't qualify as Tax resident in any event in that year.

*The important point is the rule of maximum 14  days outside Malaysia during the FIRST TAX YEAR in which you CAN qualify as tax resident (in your case 2019)

Explanation of 14 day rule

The rule is a concession by the tax authorities to link a year in which a person qualifies as tax resident to one in which they do not qualify as tax resident

While counting the consecutive 182 days required to become tax resident, the tax authorities allow 14 days in total personal absences outside Malaysia. The day count starts on 1st January each year

a) the days outside mean a person is NOT present in Malaysia, therefore they do NOT form part of the 182 day count and they extend the qualifying date

b) the effect of taking more than 14 days outside Malaysia before completing 182 days in total, is it prevents linking of tax years.

c) as long as a person is in Malaysia for a total of 182 days throughout a tax year (January-December) they will be designated as Tax Resident

d) once tax years are linked BOTH years can  then be assessed on the basis of Resident Tax Rates (and not at the flat rate of 28% which is the current Non-resident rate)

e) if the tax years are not linked, the tax year where a person was not in Malaysia for the required 182 days will be taxed at 28% and there will be no refund.

f) linking tax years means that tax overpayment for both years will be refunded i.e. difference between Non-resident rate of 28% and what is due under the tax-resident system)

Thank you..

So you mean I will be taxed 28 % this year also I will be taxed 28% in first  6 months of 2019 as well?

Yes

Hi Gravitas!

You have been a big help in guiding people.

Need your help to know few answers to below questions

a)  Does 14 day social visit includes departure & arrival day? I mean if i leave on 15th Jan'19 will it be one day or 16th will be the first date?

b) I'll become TR in Malaysia on 14th Mar including 14 day visit. So while filing tax for 2018 year in Mar/Apr end will I get the refund of 2018 while i was NTR?

c) Also the tax slabs in MY are progressive slabs or it's flat deduction.

a) Absent days are counted only if you are NOT in Malaysia for complete 24 hr day

b) Tax years are treated individually. So you can first become tax resident about July 2nd 2019.

c) Your tax filing in April/May 2019 is just reporting earnings for 2018 in which tax year you were NOT tax resident because you were not here for 182 days out of the 365 days. So no refund at that point

d) Non-resident tax rate is a flat 28%. Resident tax rates are progressive. To work out tax-resident rate, take your annual salary minus RM9000 tax-free allowance and check against the table shown in the PWC booklet (adjusting where you fall between two percentages). Divide by 12 to find monthly rate.  https://www.pwc.com/my/en/assets/public … ooklet.pdf

e) Tax is usually refunded either when departing during tax year or when filing annual tax return. The refund is the difference between 28% and the resident rate. It is therefore a refund of overpaid tax.

Hi Gravitas!

You have been a big help in guiding people.

i am working in Malaysia since 2nd October, i went back home in march from 16th of march till 1st of April, i went to LHDN today, they said my claim for tax refund is not possible, my pay is 3000. i was charged 28% since the start, so will i get the money from 2017 or not.

My contract starts on 23rd July 2018 which is less than 182 days for the current financial year and as of now 28% of tax is deducted per month which will continue for next 182 from Jan 1st 2019 to June 2019. can i travel  more than 14 days in 2018 and can i travel 14 days or less in the year 2019 b/w 1st Jan 2019 - 2nd Jul 2019. Also please confirm will i get return for the year 2018 which i filed in 2019 once i became a resident in 2019(when or i am leaving the country after 182 days or in 2020) and I will get returns for 2019 in 2020.

Hi ,
I have a question, If a person joined a job in Malaysia on October month. Do he need to stay on 31st Dec and 1st  January. Or this is not mandatory. for tax saving.
?

[My contract starts on 23rd July 2018 which is less than 182 days for the current financial year and as of now 28% of tax is deducted per month which will continue for next 182 from Jan 1st 2019 to June 2019. can i travel  more than 14 days in 2018 and can i travel 14 days or less in the year 2019 b/w 1st Jan 2019 - 2nd Jul 2019. Also please confirm will i get return for the year 2018 which i filed in 2019 once i became a resident in 2019(when or i am leaving the country after 182 days or in 2020) and I will get returns for 2019 in 2020]

HI Suresh,
I am working since last 3 years in Malaysia.I can try to answer your query.
I joined September 2015. So 28% deducted till June 2016 for me. and I received the tax refund amount in November 2016 after filing ( someone from my friend received in January 2017 also).

Second point : Yes you can stay outside of country lest then 14 days in 2015 and 2016 also ( in my case). But not exceed to 14 days. If they beyond the 14 days it should be either Medical or Business Trip by your company.

Do let me know in case this answer your query .

HI Suresh,
I am working since last 3 years in Malaysia.I can try to answer your query.
I joined September 2015. So 28% deducted till June 2016 for me. and I received the tax refund amount in November 2016 after filing ( someone from my friend received in January 2017 also).

Second point : Yes you can stay outside of country lest then 14 days in 2015 and 2016 also ( in my case). But not exceed to 14 days. If they beyond the 14 days it should be either Medical either Business Trip by your company.

Do let me know in case this answer your query .

Hello Gravitas,

Sorry for one more question in same manner,

I came to Malaysia on 8th July 2018 (1 year job contract, Level 2 Visa)
I was out of Malaysia for 11 days in Sept 2018.

I will be completing 182 days in January 8th 2019.

I plan to go back to India on a vacation in February 2019 for around 22 days.

Is it okay to travel for that long? Will I be considered Resident in January and get rid of 14days' restriction and not pay another 6 months 28%?
Or will you advise not to go for more than 14 days in February?

Please guide.

Thank you very much.

Amit

Hi everyone,

Please help me out understand the tax requirements for expats in Malaysia. 😭

So I started working in Malaysia last Sept 2017, left the country for a social visit to Hong Kong in October 2017 (around 4 days - 2 full 24 hr days outside of Malaysia) and then went back to my country for another social visit in December 2017 (from 30/12/17-4/1/18).

Because I didn’t fulfill the 182-day requirement in 2017, I filed an M form for my 2017 taxes in April 2018.

Within 2018, I also left the country for social visits in March (7 days - 5 full 24hr days outside of Malaysia) to my hometown, April (5 days - 3 full 24hr days outside of Malaysia) to Bangkok, June (2 days - 1 full 24hr day outside of Malaysia) to Jakarta, September (12 days - 10 full 24hr days outside Malaysia), October (7 days - 5 full 24hr days outside Malaysia), and finally December again (24/12/18-6/1/19 wherein I left Malaysia at noon of 24/12/18 and arrived at 3pm in KLIA on 6/1/19).

Just want to understand the following:

1. Will I be getting a tax refund for the taxes I paid from Sept 2017-Dec 2017 when I file my taxes in April 2019?

Because I originally thought that I need to stay 182 consecutive days inside Malaysia (with 14-days in this 182 days allowed for social visits) so I fulfilled it from March to September 2018 but not in 2017. Plus, as I understood originally, I needed to be physically in Malaysia on 31/12-1/1 in order to link the 2 years together, so I had originally thought I won’t be able to get the refund. However, I saw a post here stating that the 14 days is on top of the 182 days? So I got confused.

2. I’m planning some trips this year outside Malaysia — I plan to go to Japan with my colleagues on a holiday trip this May for 12 days but I need to also go back to my hometown on June and October — and want to clarify because recently, an HR staff told me that I understood the tax requirement wrongly and that the 182 days is cumulative, not consecutive. Meaning, as long as I stay in Malaysia for more than 182 days in 1 tax year (even if it’s not consecutive), I will be able to get resident tax rate? But this HR staff isn’t an expert in taxation and payroll so although I’m extremely grateful for his advice, I’m a bit cautious to take it because I definitely don’t want to be taxed with the non-resident rate again. 😭

Kindly advise, thank you so much for the assistance.

1. You seem to have forgotten to add 1-4 January to your holiday calculations for 2018 and if so I think you have exceeded the 14 day rule and wont be able to link tax year 2017 to 2018.

You don't have to be in Malaysia on 31 Dec or 1 Jan (that was an old rule)

You will however have become tax resident once you had been in Malaysia for a total of 182 days during 2018 (i.e. its a cumulative calculation).

2. Your HR is correct, it is cumulative when counting the 182 days. It is ONLY consecutive when trying to link tax years, using the max 14 day rule.

Hi Gravitas, thank you for answering so quickly! 🙏 I have some more clarifications, sorry.

So 1 - I just want to know why my holiday for 1-4 Jan 2018 was part of the count? 🤔 Does it mean that because I exceeded 14 social visits within tax year 2018, so I can’t link 2017 to 2018? Or is it because I exceeded 14 days social visits in tax year 2017 (due to 1-4 Jan 2018) which is why I can’t link it to 2018?

2 - Just to make sure I understood correctly: because I’ll be staying for the whole year in 2019 (my work contract ends in Sept 2020), so even if I do go to my planned trips as mentioned above (which will definitely exceed 14 days but cumulative in 2019 will still be more than 182 days), then I will still remain as being taxed a resident rate, correct?

Thank you so much again 🙏🙏🙏

jlyang :

Hi Gravitas, thank you for answering so quickly! 🙏 I have just one more clarification — because I’ll be staying for the whole year in 2019 (my work contract ends in Sept 2020), so even if I do go to my planned trips as mentioned above (which will definitely exceed 14 days but cumulative in 2019 will still be more than 182 days), then I will still remain as being taxed a resident rate, correct?

Yes, you will be tax resident for 2019 based on a cumulative total of 182 days in Malaysia between 1st Jan and 31st Dec.

Your case is complicated by the fact that your absence in December 2017 and January 2018 is over two tax years.

But I did not notice your actual 24 hr periods where fewer and you may only have been outside for 13 days. But there is a rule that automatically links the days in 2017 to the total when over two tax years.

I will try and find the rule for you so you can enquire yourself. I find it a difficult rule to understand.

Hi Gravitas! Sorry, last questions 🙏

So hypothetically speaking (just for me to fully understand), if between Sept-Dec 2017 + Jan-March 2018 (approximately 182 days) I only left Malaysia for less than 14 days, I would have qualified for the refund?

And for 2020, just to confirm, since my contract ends on Sept, even if I leave Malaysia within 2020, as long as cumulatively from 1 Jan to Sept, I have stayed in Malaysia for 182 days, then I’ll have resident tax rate? Because I have originally not planned to leave Malaysia for any trips in 2020 after February because I thought I had to have rendered the 182 days consecutive.

Thank you!

jlyang :

So hypothetically speaking (just for me to fully understand), if between Sept-Dec 2017 + Jan-March 2018 (approximately 182 days) I only left Malaysia for less than 14 days, I would have qualified for the refund?

I AM NOT QUITE SURE WHAT YOU ARE THINKING, BUT THE 182 DAYS CUMULATIVE REQUIREMENT IS IN EACH TAX YEAR - JANUARY TO DECEMBER.  IT IS NOT A CASE OF COUNTING 182 DAYS STARTING IN SEPTEMBER 2017.

And for 2020, just to confirm, since my contract ends on Sept, even if I leave Malaysia within 2020, as long as cumulatively from 1 Jan to Sept, I have stayed in Malaysia for 182 days, then I’ll have resident tax rate? Because I have originally not planned to leave Malaysia for any trips in 2020 after February because I thought I had to have rendered the 182 days consecutive.

CORRECT - AS LONG AS YOU COMPLETE 182 DAYS IN 2020 YOU WILL REMAIN TAX RESIDENT.  IF YOU WERE LEAVING SAY IN JUNE 2020 WHEN THERE WERE LESS THAN 182 DAYS PRESENCE DURING TAX YEAR 2020, THEN YOU WOULD HAVE TO BE CAREFUL TO LINK 2019 TO 2020

Thank you!

Hi Gravitas!

Really really sorry for the multiple clarifications 😞 The reason why I’m actually trying to understand what had happened between 2017-2018 which caused me unable to link the tax years (and thus, unable to get the refund) is because I have a colleague who is sort of in the same situation right now wherein he joined the company in Nov 2018 and was taxed the non-resident rate. So I had thought to clarify the situation so that I can also advise him what to do/not to do so that at least he can link 2018 and 2019 in order qualify for a refund for his Nov-Dec 2018 tax.

Thank you again! 🙏

This guide may be helpful
http://lampiran1.hasil.gov.my/pdf/pdfam/PR6_2011.pdf

Sorry for the late reply. Noted on the link, thank you so much Gravitas! 😆🙏

Hi all,

After going through all the comments, I was able to understand the process a bit. Thanks for all the knowledge you had shared.

Yet, I have a small clarification and it would be of great help if anyone in this community could help me with that.

My wife came to KL under 2 years contract on October 2018. She has to complete 182 days in 2019 to become a tax resident. But we are going back to India for 16 days for a family function in May, 2019.

She will not be able to complete 182 days and she has to start the count from June again till December 2019 to become a tax resident. Till then she will be deducted 28% tax. Am i right?

My query is that, will she get a tax refund for entire 2019 and 2018 (She will be linking it back to 2018)? Or will she get a tax refund only from June 2019 to December 2019? When does she need to file a tax? in 2020 or once she completes 182 days i.e December 2019? She is filing her tax in April 2019, what can we expect out of this filing?

Any form of help would be much appreciated. Thanks.

Two things.

By taking 16 days in India she will not be able to link tax year 2018 to 2019 so will always be paying 28% tax Oct_Dec 2018.

However days are counted only when 24 hrs outside Malaysia.

Alll she needs is a total of 182 days in 2019 Jan-Dec. So 16 days just delays the qualifying date.

Tax return is filed March-April following year.

"Akl she needs is a total of 182 days in 2018 Jan-Dec." Did you mean 2019? Because she entered Malaysia only on Oct, 2018 as I had mentioned earlier.

So when we file the tax next year (2020), will we be getting the tax refund which we had been paying throughout the year?

Thanks again for your clarification and prompt response.

Yes I meant 2019. From 182 days onwards (ie 182 + 16) she will pay resident rates and have a tax free allowance and deductibles.

Any over payment of tax ie difference between resident and non resident rates will be repaid in 2020 unless she leaves before then and does tax clearance.

Thank you Gravitas.

Just to make things clear,
As you had said earlier that I will not be able to link 2018 and 2019. This means I will not be getting tax refund of whatever I had paid during OCT 2018 to DEC 2018. Is this right?

Correct. No tax refund unless 14 day rule is respected and tax years are linked.

Need to do Tax return for 2018 now in any event.

You are truly a tax expert [at]Gravitas
I arrived in Malaysia in Oct 2017 and had to pay a flat tax of 28% as a non-resident.
I am eligible for tax residence for 2018.

According to this link http://lampiran1.hasil.gov.my/pdf/pdfam/individual.pdf, temporary absence is allowed for:
1) Business-related trips
2) An ill-health issue of self or immediate family member, and
3) Social visits not exceeding 14 days

Are social visits (up to14 days) are exclusive or inclusive of a health-related trip. I went to back to my home country for more than 14 days to take care of my sick father.
Thank you!

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