Deductions from salary in Malaysia (other than taxes)...

There is the EPF but voluntary for non malaysians. So basically no

I have also recently started working in Malaysia, although my pay isn't as high as yours.  I've been told that I will have to pay 26% tax on my income until I can put together 180 days (about six months) in one year, before my tax reverts to the regular rate that everyone else pays.  As I've started just started this August, I won't qualify this year.  However, I will qualify next year by July.  Another teacher told me that she recently received the rebate, which was a good sum that she was pleased to get.

You get the tax back in first week of May if you submit online by end of April for prior tax year - 1 Jan to 31 Dec.

You MUST be in Malaysia on the 31 Dec 2012. It is unwise to travel in the first 6 months outside of Malaysia.

Medical insurance, books (<1000RM) and computer costs (<3000 RM every 3 years) are tax deductible btw. Keep the receipts! The submnission was very easy and cash credited to my account in early May. Very simple!

Thanks for taking the time to share this information.  It will help me.

@Nemodot - Thanks for the info...

@arielky -

I dont think that you will need to qualify till July. Since you joined in Aug, you would be resident by Jan. So, ideally after Jan, you can get normal tax rates. I remember reading this somewhere, but I am unable to find the web page now.. If I find again, I can post the link here...

Next, my employer told that I can be out of Malaysia max 7 days during first 6 months, and still claim the resident status without starting over again...

rjv1704 wrote:

@Nemodot - Thanks for the info...

@arielky -

I dont think that you will need to qualify till July. Since you joined in Aug, you would be resident by Jan. So, ideally after Jan, you can get normal tax rates. I remember reading this somewhere, but I am unable to find the web page now.. If I find again, I can post the link here...

Next, my employer told that I can be out of Malaysia max 7 days during first 6 months, and still claim the resident status without starting over again...

Sorry to say you are totally wrong about being resident in Jan. I started in august and only resident in march after 6 months that is tax law. In Jan you still get taxed 26% unless the employer makes a mistake which does happen so yours may have done that however again that can be a hassle although risk is with employer if you do a runner as they owe the tax!

You can be out 14 days per my employer BUT it is strongly advised not to do so as more hassle as you need to provide more paperwork. My employer said they had major hassles before with people going away for even a weekend and knowing how things are best to avoid it!

Nemodot wrote:

rjv1704 wrote:

@Nemodot - Thanks for the info...

@arielky -

I dont think that you will need to qualify till July. Since you joined in Aug, you would be resident by Jan. So, ideally after Jan, you can get normal tax rates. I remember reading this somewhere, but I am unable to find the web page now.. If I find again, I can post the link here...

Next, my employer told that I can be out of Malaysia max 7 days during first 6 months, and still claim the resident status without starting over again...

Sorry to say you are totally wrong about being resident in Jan. I started in august and only resident in march after 6 months that is tax law. In Jan you still get taxed 26% unless the employer makes a mistake which does happen so yours may have done that however again that can be a hassle although risk is with employer if you do a runner as they owe the tax!

You can be out 14 days per my employer BUT it is strongly advised not to do so as more hassle as you need to provide more paperwork. My employer said they had major hassles before with people going away for even a weekend and knowing how things are best to avoid it!

hi,

please help me understand -

I am joining on 10th Sept 2012. So, I will be finishing 182 days on around 10th March 2013. So I would be taxed at 26% till March 2013. After that, I would be taxed at normal resident rates.

Is this understanding correct?

Hi,

Malaysian tax year is calendar year..you wont be completing 182 days in Malaysia in the year 2012 so you will be taxed at 26%.

2013 is a new tax year and you need to complete 182 afresh so that means only by Jul 2013 you will be considered a resident and will be eligible for a lower tax rate.

I also got to know after landing here in Aug 2012. You gotta pay higher tax but tax for 2013 at the higher rate is refundable, atleast thats what I been told by my employer.

I hope it clarifies your doubt.

Take care,
Rajat

Hey Rajat,
So that means we need to start over every calender year and tax will be 26% for first 6 months and lower in later half of that year?
Rgds
Pra

moving2KL wrote:

Hi,

Malaysian tax year is calendar year..you wont be completing 182 days in Malaysia in the year 2012 so you will be taxed at 26%.

2013 is a new tax year and you need to complete 182 afresh so that means only by Jul 2013 you will be considered a resident and will be eligible for a lower tax rate.

I also got to know after landing here in Aug 2012. You gotta pay higher tax but tax for 2013 at the higher rate is refundable, atleast thats what I been told by my employer.

I hope it clarifies your doubt.

Take care,
Rajat

I will restate this - it is 6 months from arrival! What the problem is some employers don't understand or just keep taxing you and keep the money. You become resident in march if arrive in september.

yep, 6 months from arrival irrespective of which month.. and 7 days leave allowed, right?

Malaysian Income tax provision states,"You are non-resident under Malaysian tax law if you stay less than 182 days in Malaysia in a year, regardless of your citizenship or nationality."
A year is calendar year. So the interpretation given by my employer is that you gotta join before 30th June of the year to become a resident in that year and future years. If you join after 30th June then next year is a new tax year and you again have be in Malaysia for 182 days to attain resident status so that means not until July next year.

This is an old post so I hope that you guys have got the right directions and answers. however, in case you have not...and for others,.... here are some pointers;

1. If you join in the second half of a year and do not complete 182 consecutive days in the calendar year, you will be taxed at 26%. However, on completing 182 days, you will be refunded the additional amount that was taxed. For example, if you join on 1 September so roughly you would spend 120 days in the year. After completing another 62 days in the next year, you would become a "tax resident". You would be taxed lower and the additional tax charged in the previous year would be refunded

2. In case you join in November (you will stay for less than 60 days in the calendar year), in the next year after completion of 182 days, almost the entire sume would be refunded. In my case, I had joined on 8th November 2011. My company did not deduct any tax and told me that my tax liability is zero as per their calculations. However, in January 2012, an income tax official told me that I will have to pay flat 26% on my income in the previous year which would later be refunded totally or at least a large sum would be refunded. I was ready to pay the sum but I could not file the tax in January as my income tax number had not been generated by the income tax department. It came only in May end. By the time, I had completed 182 consecutive days. So when I approached the tax department again (I carried the sum that was indicated by the tax officer in January), they said that I can file a zero tax return. So I did not have to pay anything!!!

3. You need to complete 182 consecutive days to be considered a 'tax resident'. However, social visits of upto 14 days, health related travel for a certain period as well as all types of business travel are exempt. That is my understanding but you may want to double check upon that

4. For non-malaysians, there are no other deductions apart from TDS

5. Be prepared before talking to tax department officials. A lot of them are not extremely familiar with the taxation laws related to expats. They themselves admit that. I know a case where a colleague was asked to pay a hefty sum at the time of filing taxes however the money had to be paid in another tax office. Later, the other tax office said that there is no need to pay anything and helped the colleague in filing the taxes. However, the first tax office still calls him periodically to check whether he has paid the sum!!!

Hope this helps. In case you are still confused, feel free to reach me. I had gone thru truck load of literature regarding the income tax laws in Malaysia before filing taxes. I would be happy to share the material with anyone who needs it. Free of cost!!! I am no tax consultant however, if you still want to clarify something, I would charge 2 beer pints per advise.

moving2KL wrote:

Malaysian Income tax provision states,"You are non-resident under Malaysian tax law if you stay less than 182 days in Malaysia in a year, regardless of your citizenship or nationality."
A year is calendar year. So the interpretation given by my employer is that you gotta join before 30th June of the year to become a resident in that year and future years. If you join after 30th June then next year is a new tax year and you again have be in Malaysia for 182 days to attain resident status so that means not until July next year.

Thst means you have a very stupid employer, or one too cheap to get legal advice or liers who will steal your money.

RUN!

Hi,

I am having job of 10 MYR in KL, Malaysia,

What will be tax rates for me per month. I will start from Feb'13

and I will be outside of malaysia for 2.5 weeks in month of april.

Please advice me how much tax will be for me. will i have to pay 26% for a year. if no how it will go ??

I have joined In satyam , malaysia on 21st nov 2012 and can you please advise how to make use of the 48 days that i have stayed here in malaysia in the year 2012 to complete 182 days in malaysia.

colonel_2005 wrote:

This is an old post so I hope that you guys have got the right directions and answers. however, in case you have not...and for others,.... here are some pointers;

1. If you join in the second half of a year and do not complete 182 consecutive days in the calendar year, you will be taxed at 26%. However, on completing 182 days, you will be refunded the additional amount that was taxed. For example, if you join on 1 September so roughly you would spend 120 days in the year. After completing another 62 days in the next year, you would become a "tax resident". You would be taxed lower and the additional tax charged in the previous year would be refunded

2. In case you join in November (you will stay for less than 60 days in the calendar year), in the next year after completion of 182 days, almost the entire sume would be refunded. In my case, I had joined on 8th November 2011. My company did not deduct any tax and told me that my tax liability is zero as per their calculations. However, in January 2012, an income tax official told me that I will have to pay flat 26% on my income in the previous year which would later be refunded totally or at least a large sum would be refunded. I was ready to pay the sum but I could not file the tax in January as my income tax number had not been generated by the income tax department. It came only in May end. By the time, I had completed 182 consecutive days. So when I approached the tax department again (I carried the sum that was indicated by the tax officer in January), they said that I can file a zero tax return. So I did not have to pay anything!!!

3. You need to complete 182 consecutive days to be considered a 'tax resident'. However, social visits of upto 14 days, health related travel for a certain period as well as all types of business travel are exempt. That is my understanding but you may want to double check upon that

4. For non-malaysians, there are no other deductions apart from TDS

5. Be prepared before talking to tax department officials. A lot of them are not extremely familiar with the taxation laws related to expats. They themselves admit that. I know a case where a colleague was asked to pay a hefty sum at the time of filing taxes however the money had to be paid in another tax office. Later, the other tax office said that there is no need to pay anything and helped the colleague in filing the taxes. However, the first tax office still calls him periodically to check whether he has paid the sum!!!

Hope this helps. In case you are still confused, feel free to reach me. I had gone thru truck load of literature regarding the income tax laws in Malaysia before filing taxes. I would be happy to share the material with anyone who needs it. Free of cost!!! I am no tax consultant however, if you still want to clarify something, I would charge 2 beer pints per advise.

I have joined In satyam , malaysia on 21st nov 2012 and can you please advise how to make use of the 48 days that i have stayed here in malaysia in the year 2012 to complete 182 days in malaysia.

Can you please help me with tax rules and please help me how to become tax resident if i am coming back to india on may 21st.

Joining date: Nov 21st 2012
Releiving date: May 21St 2013.

How to become tax resident?

i need to know if i came to malaysia on short visit like EP for less than 60 days employment i mean working days. And total stay wad 71 days, so do i need to get all my tax refunds from employer directly or tax dept. Do i need to file returns or not.
Employer is deducting from salary and telling me thst they gave to tax dept. Plz advise.

Thks,
sami

You pay 26% tax. You cannot reclaim.

Why would you think otherwise?

I am from India. I joined a Malaysian company 3 weeks back for a full time position with a very good salary. But now, I would like to go back to my country for some personal reasons. I have already resigned from here and as per the company terms I am serving a notice period of 1 month. I would like to know if I am eligible to pay tax or not? My entire stay in Malaysia will be 44 days. As of now, I have a 2 years of Employment pass which will be ending in the year 2015 and this is my first visit to Malaysia.

I would appreciate your reply on the same.

Hi,

Yes u can claim back i suppose.

The information  given by other person is wrong that leave it.

I have a situation

Actually started working in KL from Jul 1st 2013 and I see by Dec 31 it comes to 184 days. So I understand I will be a Tax Resident for this year and can avail the refund.

But the problem is  I will be going back to India permanently by Jan 2014. My question - can I still file 'returns' online from India and get back my money even I am no more in Malaysia?

Also between this period if I travel to India less than 14 days ,
will that be counted and comes to 184 days ?

Now this is what I would really call it a situation. Buddy I would suggest to get a tax lawyer to answer your question.
Cheers..!

Hi, May i request you to plase provide some literate to read on "Income Tax for Salried Person In Malasiya". I will be helpful to me.

Dharmesh76 wrote:

Hi, May i request you to plase provide some literate to read on "Income Tax for Salried Person In Malasiya". I will be helpful to me.

Try searching on Google..!!

Yes, you still can file online but if there is any refund, IRBM only issue local cheque/direct local bank transfer. If you are not present in Malaysia, you need someone to help you to bank-in to your local bank.

And if the absent period of less than 14 days is for personal reason, it's won't be counted into the 184 days. Means you have lesser than 182 days and not qualify for resident tax rate.

hikl wrote:

I have a situation

Actually started working in KL from Jul 1st 2013 and I see by Dec 31 it comes to 184 days. So I understand I will be a Tax Resident for this year and can avail the refund.

But the problem is  I will be going back to India permanently by Jan 2014. My question - can I still file 'returns' online from India and get back my money even I am no more in Malaysia?

Also between this period if I travel to India less than 14 days ,
will that be counted and comes to 184 days ?

As long as you earn income from Malaysia, you are subject to tax no matter how many days you are present. In your case, it's a flat rate tax of 26% on your income.

foruaks wrote:

I am from India. I joined a Malaysian company 3 weeks back for a full time position with a very good salary. But now, I would like to go back to my country for some personal reasons. I have already resigned from here and as per the company terms I am serving a notice period of 1 month. I would like to know if I am eligible to pay tax or not? My entire stay in Malaysia will be 44 days. As of now, I have a 2 years of Employment pass which will be ending in the year 2015 and this is my first visit to Malaysia.

I would appreciate your reply on the same.

Try this link
mia.org.my/new/psp_taxation_knowledgebase_public_detail.asp?tid=3&rid=9&id=945

coooolguy_tdh wrote:

Dharmesh76 wrote:

Hi, May i request you to plase provide some literate to read on "Income Tax for Salried Person In Malasiya". I will be helpful to me.

Try searching on Google..!!

Hi,
My name is sagar and i am going to join a new company in malaysia , Lumut from 25th of nov 2013.

I am interested in knowing about the tax structure and also what is the salary structure of expats for a sales manager position in malaysia ????

Hi All,

I came in Kuala Lumpur on 9th Nov, 2013, joined Microsoft Office on 11th Nov, 2013. I travelled for 2 days to Singapore on 7th Dec, 2013 and returned on 9th Dec, 2013. I stayed on 2 days i.e., 31st Dec 2013 and 1st Jan 2014 in Kuala Lumpur... (luckily after reading some posts).

Now, my question is that when will I complete my 182 days....will it be 9th May 2014 plus 2 days (as I was out of country on a social visit to Singapore) that means 11th May 2014.....or it will be counted again from 9th Dec, 2013..?

I really appreciate any help on this as I was told by my finance dept. that I can go out for 14 days on social visit and that time will be extra. Meaning, if I am out of Malaysia on social visit for 14 days then I should be completing my 182 days on 23 May, 2014 (instead of 9 May 2014).

Please help me get the clarification on this situation as I couldn't find any good answer for it.

Regards,
Abhishek Singh

Hi your post is confusing do you mean 2+14? Then you would be deemed non resident and pay 26%. The 6 month clock would start ticking from return from 14 day trip.

In reality make not much of a  difference if you meant 14 days max. My company doesn't add the 14 days on. That seems odd!

Why do you think staying in KL has anything to do with the tax calculation?  It was still in Malaysia, the last time I looked? Its 182 days in each tax year i.e. Jan to Dec. 2013 you are non-resident. You need to do 182 days in Malaysia to become tax resident. If you leave Malaysia for more than 14 days for social purposes, the clock starts again the day after you return. There are some carry forward arrangements in certain circumstances, but most people consult Hasil as it is not the employers place to give tax advice to an employee.  You can read the rules for residency and tax calculation from a downloadable brochure here:

http://www.pwcias.com/home/eng/ias_my.html

the 182 days are accumulation days in the one fiscal year, but some companies did a shortcut buy cutting 26% of the salary for the first 6 months. if your total salary below RM 100k per year including bonuses and benefits, then no need to worry much. Also LHDN would return the excess tax payment (usually from April on the following years).

Companies are required to deduct the flat rate of 26% even though it is likely that a person will complete more than 182 days in one calendar year and qualify for the tax step and deductions system. If a person becomes resident, the tax rate is reduced once residency is confirmed and the tax overpayment is taken into account when the tax return is examined the following April. There is no tax refund for non-residents for the tax paid at 26%, i.e. if a person worked in Malaysia from August to December one year, they will pay the flat rate of 26% and receive no refund, as they were tax non-resident (worked less than 182 days).

Can someone please confirm what the lower rate of tax % is?

Thanks!

Check out the tax bands at the HASIL website (the rule of thumb is 20%):

http://www.hasil.gov.my/
goindex.php?kump=5&skum=1&posi=2&unit=5000&sequ=11

The lowest rate of tax is technically 0% (first band above the Personal Allowance)

A rather meaningless number though. Why ask?

Hi
I think I miss understood.
I will being earning within the higher tax bracket so am I correct in saying that I will pay 26% tax straight through and that there will be no reduction in tax after the 182 days?

Cheers
Stef

Did you check the tax bands on the link provided?