Resident status for income tax

Hi everyone,

I've read the past threads and would just like to clarify a few things.

I have a 1-year contract, which started from September 2017 to September 2018.

- In 2017, I was out of Malaysia for 5 days. This year in May-June I will be leaving for vacation for 13 days. As the count for 182 days reset in 2018, I assume that social visit count also reset (ie, I can still link 2017 to 2018 to get refunds for 2017)?
- If I leave the country for more than 14 days in the first 6 months of this year, will I still be able to link 2017 and get the refunds for that year? Meaning will the residency status only be delayed and there won't be any consequence as I manage to complete the 182 days the ff month (July)?
- Out of the country trips due to work are excluded from the 14 days social visit count. What proof should I show the LHDN for this? (Employees are sent to SG but only using tourist visas.)
- I have read in another forum that it's possible to process the refund from the preceeding year after getting the residency status. I read here that refunds are processed only during annual tax filing or clearance. Which one is correct?

Thanks so much!

"If I leave the country for more than 14 days in the first 6 months of this year, will I still be able to link 2017 and get the refunds for that year? Meaning will the residency status only be delayed and there won't be any consequence as I manage to complete the 182 days the ff month (July)?"

No you wont be able to link 2017 to 2018 if you exceeded 14 days of "personal" absence (holiday) during the first 182 "consecutive days" of 2018.

Any official absences your employer should prepare documentation including company stamp to be submitted with your tax return (Its time to do one for tax year 2017 now).

You will still become tax resident after the physical presence of 182 days in 2018 but the number of "personal" days will delay the total reaching 182.

Any overpayment for 2017 (i.e. difference between resident and non-resident rates) will be dealt with when you leave the country in September 2018, or if you continue by getting your contract renewed, it will be assessed at the next Annual Tax Return in Spring 2019.

Thanks Gravitas!

Work trips have yet to happen but should be scheduled this April-May. So basically I will have 13 scheduled leaves + work trips during the first 6 months of 2018. I assume in this case the documentation cannot be attached to the company's filing for tax since it is for the current year. Should I use the documentation when I file for a residency status certificate then?

I'm confused about what you said - I won't be able to link 2017 to 2018 if social visits exceed 14 days but I will still be able to get the refunds for 2017 when I am processing clearance? What is the difference?

They check your passport entry and exit stamps for residency status so you would have to document which type of absence you took.

If you exceed 14 days personal absence during the first 182 days of 2018 it means you will pay non-resident tax for 2017 i.e. 28% flat rate deduction.

I see, thanks so much! One last thing, are documents enough or should I ask our company to let us acquire the appropriate work visas instead of using tourist visas when going for work trips?

Documents are sufficient. Keep all your paperwork such as ticket stubs and boarding cards etc.

Thanks so much Gravitas! Can't express enough how much this helped. :)

One important thing is not to link a business trip to a personal absence. Be sure to depart Malaysia on personal leave and return to KL i.e. you need to be in country before and after each temporary absence.

Also if you are travelling in several times zones, be aware of the number of days absent in KL terms.

Hi Gravitas
I have concern about 182 days could you clarify me that I have worked since 27 Nov 2017 that mean I were deducted 28% income tax every month until now (March). I would like to quit job since 7 Jun and move back to my country that I hope will meet 182 working day. I have claimed income tax refund on March for December income tax.
So if I quit my job since 7 Jun could I will be able to claim income tax for 5 months from Jan to May or I have to work until complete my contract (1 year).
I am really confusing about this hope anyone help me clarify about this issue.

For 2017 you were working for less than 60 days and should pay no tax at all for that short-term period.

Just make sure you don't quit before you have done 182 days in 2018 or you will get no refund of the overpayment between 28% and the tax resident deduction rate.

If you quit on 7 June that is less than 182 days so no tax refund.

Work out 183 days from January 1st 2018 and that should be your absolute earliest leaving date.

You risk getting blacklisted leaving so early and your company blocking you from getting another EP in Malaysia.

Thank you for your clear reply, Gravitas

Your information so useful.

I thought 183 days counted since start date of employment.

For the case that employee quit their job before contract expires, I think that was common.

So it mean I have to wait until after July.

One other detail you should think about is did you take any holidays outside Malaysia since January 1st 2018?

The reason I ask is, you would need to add that number of days to the 182, to get the earliest date you should leave the company.

Hi Gravitas,

I want to ask about if i exceed 14 days personal absence on the first years.
I will start to stay on malaysia on august 2018, then is not possible to me to complete my 182 days on 2018 because there is just 152 days left until 31 december 2018.
Then i will complete it next year when i already in July 2019.

My question are:
1. is there any consequences if i leave malaysia exceed 14 days in 2018?
2. May i still refund for year 2018 overpayment tax rate  in 2019?

1. The maximum 14 days* personal absences are in 2019 (to link 2018 tax year to 2019).

2. As long as you link the two tax years, 2018 will be reassessed retroactively on the tax resident basis.

*qualification date is delayed by the number of absent days (e.g. 182 + 10 days personal absence = qualifying date will be after 192 days).

This means taking absences in 2018 are not relevant (because whatever, you are non-resident).

Hi Gravitas,

I have a doubt in claiming overpaid tax. I have recently (from august) started working in Malaysia. I have been taxed as a non resident at 28%. My doubt is, whether the tax I pay for the remaining period of this year can be claimed back(the overpaid tax)?, since I won't be covering 182 days in this calendar year.

Difference claimed is between resident and non-resident 28% rate

To get refund for 2018 need to link this  tax year to 2019 tax year.

This is done by not taking holiday or personal absences outside Malaysia of cumulatively more than 14 days in the time from 1st January 2019 until you complete 182 days. Any days taken need to be added to 182 to find new qualifying date

Thanks for the reply Gravitas.
From your answer I think that, I can claim the overpaid tax for my stay of 12 months. To put my question more clearly,
Consider that I am not going to leave Malaysia till next year August. I would have spent a year in Malaysia by that time. So I can get tax refunds for the tax I paid for the past 1 year right? regardless of not completing 182 days in 2018, Will I be able to reclaim the tax I paid for all 12 months?

It's nothing to do with spending one year in Malaysia.

Everything is worked out on tax years which run from January to December each year.

You can fulfill the 182 days in 2019 because you are leaving in August and therefore can be here sufficient days (i.e. 182 days ends about July 2nd 2019)

You have the option to also link 2018 and 2019  tax years as described above, that way you will be able to make a claim also for 2018.

Your refund will be processed when you leave in August 2019.

Oh okay, Thanks. Was in a mindset that, I can't claim refund for 2018. Good to hear this :)

I'm less than 182 days in Malaysia for 2018 but will be continue working more than 182 days for 2019. Will I be able to link 2018 to 2019 if I'm out of Malaysia from December 31, 2018 until January 4, 2019?

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