Tax residency

The tax office does not have a crystal ball, so it looks at tax residency after the event through income tax reporting annually in April (or on permanent departure from Malaysia i.e. at the end of a contract and employment pass).

You will be paying 28% tax until approximately 2nd July 2019

You can link tax years if you take no more than 14 days personal absence outside Malaysia from Jan-Jul in 2019. By restricting absences, you will then be eligible to link tax year 2018 to tax year 2019 and get a retrospective reimbursement for 2018.

This reimbursement is the difference between the 28% flat rate and the tax-resident rates.

So in effect, you can end up paying tax-resident rates for the whole of your time in Malaysia, but its going to be done retroactively when you leave the country.

Tax residency is based on 182 days in any tax year. So in 2019 any personal absences are added to the 182 days to find the qualifying date e.g. 10 days outside Malaysia means qualifying date then becomes 192 days.

So in effect, you can end up paying tax-resident rates for the whole of your time in Malaysia, but its going to be done retroactively when you leave the country.

>Can I ask for more explanation, please? I‘d still paying tax resident rate when I leave the country?

Tax residency is based on 182 days in any tax year. So in 2019 any personal absences are added to the 182 days to find the qualifying date e.g. 10 days outside Malaysia means qualifying date then becomes 192 days.
> let‘s say I‘d take an off on December 2018, will they add this to their count of absences to 2019?

Is the 28% tax deductible to the monthly payroll? I‘ve heard other expats that they pay their taxes at the end of their contract which I guess is too high because it is accumulative.

Thank you.

1.  Although you will be deducted 28% flat rate until you qualify - when you leave, your tax report will be completed and you can get a tax refund. You will do a tax report for 2018 by April 2019 (but no refund as not tax resident as less than 182 days in 2018) The first tax report is important as it gets your tax record started.

2. Its the days outside Malaysia in Jan-Jul 2019 that are counted.  Its the rule how to link tax years.

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

3. The employer must deduct the tax monthly over payroll. This is the only legal method.

Its the days outside Malaysia in Jan-Jul 2019 that are counted.  Its the rule how to link tax years.

> so it means I can have a 14-day vacation in 2018 without worrying if I‘ll get a tax refund when I completed my 182 days in 2019.

About tax reimbursements/refund, which will be given until I qualified by july 2019, will the refund computation includes all the taxes I paid on my very first day in Malaysia in 2018?

Thank you so much for the help!

1. Yes it's best to take vacation in 2)
018.

2. Linking tax years means whole period (2018 & 2019) can be assessed on tax resident basis.

3. There are fines if the tax is not paid monthly. This increases the tax owed and would reduce any tax reimbursement

Hi, Gravitas.

I've had almost 3 yrs working exp in KL on and off. My most recent one was from Oct 01 2017 to May 17,2018(the date I left Malaysia). Now I'm coming back to Malaysia for work again on July 10. Assuming I don't take any absences for the rest of 2018 and also for the rest of the first half of 2019, when is the earliest date that I'd be considered a tax resident? I'm just not sure where to start counting to fulfill the 182 days requirement. Hope you can help me. Thank you.

Read P.6 as you may be able to connect 3 tax years
https://www.pwc.com/my/en/publications/ … oklet.html

If not, as long as you are in Malaysia for 182 days in 2018 you will become tax resident.

Hi Gravitas!
Does it mean I can visit other places for vacation for more than 14 days this 2018 and still won‘t affect my tax residency when 2019 starts?

Probably by 2019, I will definitely go on a holiday to nearby countries as well.