I am Joining Malaysia Firm in August when I will be TAX resident

Tax residency is based on each individual tax year so for 2014 you will be taxed at the 26% flat rate and there is no refund for any extra tax you may have paid in 2014 subject to the normal tax bands. HASIL website has the details.

http://www.hasil.gov.my/goindex.php?kum … mp;sequ=11

Tax residency only starts after 182 days in any tax year. So 2015 you will be deducted 26% tax for the 182 days, but after that the normal tax bands will be applied.  You will be able to claim back any overpaid tax when you file in February 2016.
Here are some explanations:

http://www.mia.org.my/new/psp_taxation_ … amp;id=945

Gravatis,

I gone through the below link you shared , what i saw is rule Paragraph 7(1)(b) of the Act applies to me where I will be linked to 2015 and would be resident for both 2014 and 2015 . You mean I cannot Claim tax but will be resident ???

http://www.mia.org.my/new/psp_taxation_ … d=9&id=945

No, the tax office does not have a crystal ball and therefore they do not know when you will qualify for tax residency, as you may quit your job at some point or leave the country for more than 14 days and break the qualification period (details of this scenario are also provided in the explanations). Therefore they can only assess your tax liability based on what has already taken place i.e. retrospectively. The difference in taxation rate is probably only 5-7% and you can work that out by looking at the tax bands in the link provided earlier. Its not a huge amount of money, but there are rules about how any refunds are calculated and the tax office needs full details before they can do a person's annual assessment.

Last year the rules changed. Our HR was taken by surprise as not well advertised.

Previously if you arrived in august after 6 months your tax went down from 26% flat rate to a normal tax computation. Then you claimed back the overpayment in March 2015. Not now you can't!

Now you pay flat rate for tax for 2014 at 26% and never can claim back.

In 2015 after 6 months you become resident and you tax rate goes down and on match 2016 you claim back overpayment in 2015.

I know one school knew this and asked all teachers for august start to arrive by 30 June to avoid this tax trap.

A stupid and ill thought out rule.

So basically you lose a not in 2014. Tough!

The other fine print is that tax non-residents don't get the personal allowance of RM9000 before tax is paid. It is on the whole amount earned. Also none of the tax breaks e.g. computer equipment, insurance etc. are available to expats when they become tax resident. But do get the RM9000 (current figure) tax free.

Thanks Gravitas and Nemodot,

This seems to be a very bad rule for the person who joins second half of the year . He will loose a lot of money compare to person who joins before june 30.  When I checked with my HR he said you will be resident in February and claim back the amount .Do you know any link where this details are clearly defined  I couldn't find any thing related to second half year joining....

Everything is also explained on the HASIL website and the Chartered Accountants one you have the links above , just hunt around and re-read several times and carefully. There is nothing to confirm. You have got the correct information. Your HR is not a tax expert and should not be offering tax advice as this has confused and misinformed you.

Its the same in every country about tax residency but others are a bit different as they allow people to look at their tax over several years. Malaysia do the same, but in a different way and the waiting times for getting refunds is very long.

Many HR departments still think the old rules apply. The new rules were brought in without any announcement and many HR departments will get in wrong.

I know some companies are paying expats back in home country until 31 Dec and asking staff to basically work illegaly or get business visas. Then  stet job 1st Jan