28% Tax deduction - 14 days out of the Malaysia

You can become tax resident about 2nd July 2019.

Will need to provide documentation to support your absence of over 14 days indicating it was related to the health of a relative to get an exception to the 14 day rule

Thank Gravitas for the quick response.

Do you happen to know which documents will I need to provide? I am a bit worried as supporting documents I obtained from the hospital were not in English.

You would need to get them translated by an official government accredited translator in Malaysia to be acceptable.

Contact LHDN helpline for guidance. The documents are needed when you submit your 2019 tax return.

Only immediate effect is your change to resident tax rates for 2019 is delayed by number of days you were in India

This type of question has been discussed already in the Forum. How about his physician writing a supporting letter?

Hello.

I am currenly in Malaysia.
I would like to know if I will be able to become resident with the situation:
1.) I arrived in Nov 27, 2018 and started Nov 29,2018
2.) Will be on business trip from April 21-25,2019 (5 days)
3.) Planning to have vacation from May 29-June 10, 2019 (13 days)

My question is, will the business trip days be deducted in 14 days limit out of Malaysia?
If that is the case, should I move my vacation to June 3 or 4 instead to be safe?

If I will proceed with my plan, when can I file residency?

Hoping to know asap as I need to book ticket.

Thanks in advance!!

2018 tax year you are non resident because not in Malaysia for 182 days.

You will become tax resident after 182 days in this tax year. As you are taking 13 days (only count full 24 hr days outside) then you will need to add those 13 days to find when you will have been here 182 days in 2019. So your qualifying date will be about 16th July 2019 *plus 5 day business absence.

You can get a Certificate of Residence from LHDN once you have qualified if required. At that time your employer will need to attest the work absence in April, confirming it was an official absence.

When you file your 2019 annual tax return then tax overpayment will be refunded ie difference between resident and non-resident rates.

You need to file your 2018 tax return now.

You should be able to link tax years 2018 and 2019. This means you can get a refund between resident and non-resident rates also for 2018 but only retrospectively when you file your 2019 return

Hello Gravitas, thanks for the quick response!

How about the business trip? It will make my out of country exceed 14 days?

In total, 5 days business trip + 13 days vacation = 18 days out of Malaysia?

As mentioned your business trip does not affect the calculation. Only personal absences are counted when trying to link tax years.

However those 5 days will further delay your qualifying as tax resident to 21st July.

Hello Gravitas, you are so much appreciated!

One more thing, i will only get COR at the time that I will file and completed already the 182 days right? I should bring the requirements as well to prove my business trip form employer as well?

After completing 182 days, can I go out of country without limit at all?

Yes the COR is issued after you qualify and apply for it. The tax office scrutinises your passport for entry/exit stamps

You need to make a list of your absences. It is convenient if your employer writes a letter with company stamp giving the details. For good order, keep your boarding passes etc.

Your tax deduction becomes based on resident rates after 182 days and some employers only adjust once you show them the COR. Some do it automatically.

There is no restriction on the number of days you're outside Malaysia once you have officially become TR.

You are truly a great help! Thanks for the tips and advise. I will definitely follow it.

Hi All,

I read all comments here. I arrived in Malaysia July 5th. So basically, i still got deduct tax 28% till now.

My question.
1. I have in-out country in 2018. but from what I read, it doesn't affect me in any way since in 2018 I am not resident (less than 182 days). Is that correct?

2. My EP will end at July 4th 2019. I've counted from January 1st - July 4th = 185 days *cmiiw
So,the temporary absence isn't not within this 182 days?

3. I had to leave Malaysia from February 12th and back to KL on 14th. Means only count as 1 day right?

4. If I understood this correctly, so in 2019 (in case my contract will not renew). I have to stay 182 + 1 day (leave) = 183 days. and got my TR on July 2nd, right?

5. I did declared my tax this month for 2018 tax, so in July 2019. Do I get my tax refund? If I do, is it for 2018 only? what about this year?

Hi all,

Kindly help me in clarifying the below query.

I need to link 2018 and 2019 tax, which means I need to stay here in KL till July 2019 to become a tax resident. My query is that, till July 2019 I shouldn't leave Malaysia for 14 days straight? or a cumulative of 14 days?

If its cumulative, can you please guide me hows days are calculated outside Malaysia?

Left Malaysia -> 8th March, 2019 (approx 20:00 p.m)
Reached Malaysia -> 12th March 2019 (approx 00.10 a.m)

Is this calculated as 4 days or 5 days?

Any kind of assistance would be of much help. Thanks.

It's cumulative. Only lfull 24 hrs outside Malaysia are counted. So 8th and 12th march are not counted

Thanks for the prompt response Gravitas.

Hi Gravitas,

I could see you have been helping a lot of people on Tax related queries. Thank you for helping us out.

It would be great if you can shed some light on the following query.

Is the following true?
1. "absence in respect of socials visits not exceeding 14 days in the aggregate (social visits include any form of vacation outside Malaysia besides vacation to home country)."
- which means, if i am travelling back to India (home country) for vacation, the 14 day rule doesn't get applied?

2. "(Note that spending part of a day in Malaysia counts as being physically present for the whole day - for example, someone who arrives in Malaysia at 11pm and leaves at 3am the next day, will be considered as having stayed in Malaysia for two days)."
- but the days outside malaysia aren't calculated this way right? it is calculated as 24 hrs spent outside malaysia. Am I right?

I read this article which has been quoted in the below link
https://help.payrollpanda.my/12465-mala … nce-status

Kindly help.

1. The 14 day rule applies if you travel back to India for vacation because it is a social visit (ie not for work purposes).

2. Malaysian tax office is only interested in the number of full 24 hr days a person is N O T in Malaysia as that is how the 14 day rule is calculated

Thank you for you timely help.
So as you had mentioned earlier, if I leave on 21st May and come back on 31st May, 21st and 31st May wont be taken into account. The number of days outside Malaysia would be 9 days. Is this correct?

Correct and your qualifying date to become tax resident will be delayed 9 days

Thank you so much for the clarification

Hi Gravitas,

I am married with Malaysian and currently working under spouse visa..  today is the first day of working, my employer told me that they will deduct 28% (for first 6 months as i never paid tax before) from my salary.   I am not familiar with the Malaysia Tax, would appreciate if you could share some info on the following query:

Employment commence day: 1 April 2019

1) The employer will not deduct any %  from my salary after 6 months ?

2) I will be considered as Tax Resident if I presented 182 days in Malaysia within Jan to Dec 2019 ?

3) A tax Resident which mean I will be subject to normal income tax like my spouse?  can I subject to any tax deduction like 9000 individual ?

4) Can I submit my tax return through E- filing online on April 2020 and get the excess tax return?  or must go to the LHDN office?

5) what is M form and COR? should I register myself at LHDN office now? 

Thank you very much for your advising.

1. 28% deducted for first 182 days then you will only pay tax resident rates

2. Yes - just need a total of 182 days out of 365 days in the year

3. Spouses can opt to be taxed separately

4. First step is to apply for a tax id number. You can also register for online tax processing afterwards.

http://edaftar.hasil.gov.my/indexBI.php

You will need to submit a tax return for 2019 between about March and May 2020. Any over payment of tax will be refunded at that time. Overpayment = difference between 28% and normal rates.

5. M form is for annual reporting of tax and is for people who are not tax resident. Be is the form used by tax residents. COR is Certificate of Residence which can be applied for after 182 days if needed.

Some useful links

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

http://www.hasil.gov.my/bt_goindex.php? … mit=Search

Hi Gravitas,

Thank you for the quick reply.  but I need more explanation regard to:

1)  After 6 months (182 days), does the company need to deduct my salary based on the normal rates?  or they will not deduct anything after 182 days, because I will file my Be form between March - May 2020.

2) if I still working under the same company for year 2020, would the company need to deduct 28% for the first 6 months (182 days) of year 2020 again?  or the 28% only applied for the first time employment?

jiewen :

Hi Gravitas,

Thank you for the quick reply.  but I need more explanation regard to:

1) 28% deducted for first 282 days?  which mean the company will deducted my salary more than 6 months?  after 282 days, the company will still deduct my salary based on the normal rates?

Yes - 182 days and you always are deducted each month some tax

2) if I still working under the same company for year 2020, would the company need to deduct 28% for the first 6 months of year 2020 again?  or the 28% only applied for the first time employment?

No - once you become tax resident you continue each year as long as you are working for at least 182 days in each tax year Jan to Dec

3) From April 2019 to Dec 2019, it is more than 182 days ..  and I am not planning to leave Malaysia, So i will be a Tax resident. let's say my salary is rm3500, what is the normal rate for tax resident?

Yes it's more than 182 days. Just need to start working before 1st July. Basically 182 days is half a year.

About Rm 980 per month will be deducted from April to September

About Rm 35 per month will be deducted from October to December.

You can claim back the difference in your annual tax return which retroactively recalculates your tax due back to resident rates.

Check the PWC link I provided earlier

RM 980 will be deducted for first 182 days.. Do you have any idea what is the normal rate will need to deducted after 182 days for every month?

I updated my comment so see above. Tax is complex so estimated only

Depends on your nett salary after EPF, SOCSO, etc

Tax is worked out retroactively because the tax office does not know if you will in fact work from April to December you might leave your job. So you pay non-resident tax for 182 days and if you are still working then the deductions change to resident rates

The annual tax return sorts out any under or over payment of tax

thank you very much for your useful links...
An amount of RM35 (estimated) will need to deducted from Jan - Dec 2020 also?

About Rm 980 per month will be deducted from April to September, total RM 5880
About Rm 35 per month will be deducted from October to December, total RM RM 105

so let's say my salary is rm3500/month..When I file my annual tax (Be form) , my chargeable income will be 3500 * 9 months (april 2019 to dec 2019) = rm31500, so the tax I need to pay is around rm 600 .. then the tax return will be RM5985 - RM 600 = RM 5385 (estimated) .

Is the calculations correct?

Thank you very much for your advising...I am really appreciated it...

The deduction will be roughly the same in 2020 unless the government tax rates change or your monthly nett salary changes.

Your tax also depends whether you and hubby decide to be taxed together or separately. There are different tax-free allowances depending what you choose. eg the lead tax payer gets Rm 9000 allowance plus a spouse allowance if filing jointly.

Why do you use Rm 600 as annual tax? Tax rates are graduated ie lower % tax on lower portion of annual taxable salary and higher % on higher portions (1%-24.5% - see PWC tax guide)

Your logic behind the calculation is correct but the exact tax-resident total tax deduction for tax year 2019 can differ because of the tax regime you choose. I worked on the basis you would also get a proportion of the Rm 9000 personal allowance.  But yes you will get a large refund.

Hi @Gravitas,

I start to work 18 March 2019. But in the end of May I will travel to my origin country and I will stay there more than 14 days. I will return to Malaysia on 10 June.

My question is.. in 10 June the count of 182 days will re-start again from zero? 

From 10 June to 31 Dec we have 205 days, right? So if I want to travel at maximum 14 days between 10 June - 31 Dec it will be ok and I will become resident in the end of December 2019 and will get my tax refund regarding all year 2019 (Jan - Dec) when I fill the obligation in March/April 2020?

Is it right?

Thank you very much!

You just have to be in Malaysia for a total of 182 days in tax year 2019. All your trip back to your homeland means is qualifying as tax resident is delayed by that many days.

@Gravitas,

Thanks. So i am right with my understand?

If I come back from Brazil in 10 June and between this date to Dec 2019 travel maximum 14 days accumulate I will become tax resident in December 2019 and will get my tax refund for the hole year (Jan19 - Dec19) - the difference between 28% x 10% when I fill the obligation in March/April 2020?

Even if before (March19 - 9 June19) I travelled more than 20 days for social visit reason?

Question:
Between 10 June 2019 - Dec 2019 I have to count all the days I have been out from Malaysia before and add to 182 days even if I took more than 14 days (like 20 days) - 182 + 20? Or the count will re-start again from the beginning (without add the days I am out Malaysia because I was out more than 14 days)?

If the second point is right it will add for the 182 days count only the days if I will travel for vacation maximum 14 days during 10June 2019 to Dec 2019?

Suposing that I earn 10.000 monthly, 28% tax (2.800 montly during 12 months = 33,600 (tax payed during the year)

In March/April 2020 after fill the obligation I will be able to refund the amount between the difference 28% x 10% for the hole 2019 year?

33,600 - (10% x 10.000 x 12 months) = 33,600 - 12,000 = 21,600 I will refund? Is it correct?

And from Jan 2020 onwards I will pay 10%?

Thanks you @Gravitas again

How clear do I have to make it......

As long as you are working and paying tax for 182 that is all that is required to be tax resident.

The 14 day rule is when there is an option to link two tax years eg 2018 and 2019. It is irrelevant to you as you didn't work in Malaysia in 2018.

So final time. 182 days in total in tax year 2019 (January to December) is the Only requirement. Any 24 hr days outside do not count.

Hi @Gravitas,

Now I think is clear. Thank you.

So I can go out Malaysia how many days I want if in 2019 tax year I stay at Malaysia minimium 182 days..

And in May/Apr 2020 I will take the tax refund for all 2018 year. The difference between 28% tax payded x 10% tax (resident) all moths 2019 year?

Thanks

Tax is on a rising scale so will depend on your earnings. It's not a single rate but graduated. For example any earnings over 100k per annum the tax on that portion is 24-28%

When tax resident the calculation of tax due is based on annual salary received, less tax free allowances. eg 120k per annum less 9k tax free allowance = 111k Taxable income. The 9k tax free allowance is pro rata if not working for 12 months

A refund of any overpayment of tax is calculated via the annual tax return for 2019. Repayment is received about May or June 2020.

Hi,

I came to Malaysia by March 4th and my 182  days ends on Sep-1st.

I need to leave India for 9 days in June mid and 20 days after the Sep 05.

Whether i need to compensate the 9 days after the Sep 1st? or no need to compensate?

whether i will get Residential status after Sep 1st even though i left 9 days in June?

Regards,
Christopher

Chrisopher
The 9 days travel (count only full 24hrs outside Malaysia) in June pushes back your qualifying date by 9 days = 10th September.

You then need to add the 20 days which brings the date to 30th September.

It is a matter of 182 days being present in Malaysia during the tax year January to December. Think of an attendance register in school 😁

But it is just a "qualifying date" at which point your employer can safely switch to deducting tax resident rates (ie 182 days achieved).

Indian nationals may need to apply for a Certificate of Residence to help their home tax processes.

When you submit your Malaysian annual tax return for 2019 in April 2020, any overpaid tax is refunded ie the whole year will be assessed on resident rates retrospectively.

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