Urgent Income Tax Questions

khaiazhar wrote:

My questions are as follows:

1. When/if i receive my tax resident status next week, do i continue to pay RM2800.00/month for the remaining months of the year, or can i immediately start paying local tax rates?
DEDUCTIONS SHOULD BE AT TAX-RESIDENT RATES FROM NOW ON

2. Will i be refunded for the previous months this year (6 months) that i have paid RM2800.00/month? If yes, that refund will be refund for?
ITS NOT A FULL REFUND BUT YOU WILL BE REPAID ANY OVERPAYMENT OF TAX I.E. DIFFERENCE BETWEEN NON-RESIDENT RATE (28%) AND TAX-RESIDENT RATES

3. What do i have to do in 2019:

a) would my COR that i received in 2018 expire?
COR IS AN ANNUAL (BASED ON TAX YEAR JAN-DEC) CERTIFICATE. UNLESS YOU ARE APPLYING FOR BENEFITS UNDER A DOUBLE TAXATION TREATY WITH  ANOTHER COUNTRY IT IS NOT REALLY NECESSARY TO APPLY FOR IT EACH YEAR

b) if yes, to a) do i have to repeat the 182 days process as i did in 2018, and get COR for 2019 after 182 days process is done?
YOU WILL REMAIN TAX RESIDENT BY COMPLETING A TOTAL OF 182 DAYS IN 2019 - SIMPLY THAT.

IT DIDNT MATTER ABOUT ONLY HAVING 14 DAYS ABSENCE BECAUSE YOU WERE NOT TRYING TO LINK TAX YEAR 2017 TO 2018. LIMITING DAYS OUTSIDE JUST REDUCES THE TIME TAKEN TO BECOME TAX RESIDENT I.E. AFTER 182 DAYS.

YOU JUST HAVE TO BE IN MALAYSIA FOR A TOTAL OF 182 DAYS. SO YOUR QUALIFYING DATE WILL BE 182 + NO OF DAYS OUTSIDE MALAYSIA.

2. Does that mean I’ll get a refund for the previous 6 months that I’ve been paying RM2800.00 before having satisfied the 182 days requirement?

For example, RM2800 - RM1000 (example of new monthly tax to be paid) = RM1800 (refund amount)

3. Means when 2019 begins, i do not have to apply for COR again but continue paying the local tax rates? I am Singaporean so I think I am benefiting from the double taxation treaty.

Additional point: My short trips of less than 14 days during these 190 days that I have completed have to be deducted from the 190 days?

Thank you Gravitas.

khaiazhar wrote:

2. Does that mean I’ll get a refund for the previous 6 months that I’ve been paying RM2800.00 before having satisfied the 182 days requirement?
YES - ONCE OFFICIALLY TAX-RESIDENT THE WHOLE TAX YEAR IS ASSESSED RETROACTIVELY ON THE RESIDENT RATES. REMEMBERING ALSO ONCE TAX RESIDENT THERE ARE TAX-FREE DEDUCTIONS THAT CAN BE CLAIMED E.G. RM9K PER ANNUM PERSONAL TAX ALLOWANCE ETC.

For example, RM2800 - RM1000 (example of new monthly tax to be paid) = RM1800 (refund amount)

3. Means when 2019 begins, i do not have to apply for COR again but continue paying the local tax rates? I am Singaporean so I think I am benefiting from the double taxation treaty.
TAX CONTINUES TO BE RESIDENT RATES.
THERE IS NO AUTOMATIC BENEFIT FROM ANY DOUBLE TAXATION TREATY - THE COR WOULD BE REQUIRED BY THE OTHER TAX DOMAIN AS PROOF OF RESIDENCY ELSEWHERE

Additional point: My short trips of less than 14 days during these 190 days that I have completed have to be deducted from the 190 days?
THEY ARE ADDED TO THE 182 DAYS TO FIND NEW QUALIFYING DATE E.G. 182 + 14 DAYS = 2ND JULY 2018 PLUS 14 DAYS I.E. 16TH JULY 2018

Thank you Gravitas.

Thank you Gravitas, great help.

One last question..

I am counting the days that i was overseas this year to add it to 182.

As an example, if i my trip is from 1st April to 5th April, do the tax department count that as 5 days or do they exclude the day that i left and returned?

Thank you!

They exclude only days where you were outside Malaysia for 24 hrs i.e. from 12.00 am to 23.59 pm

Hi Gravitas,

I have received my COR for year of assessment 2018. To confirm a few details,

1. I can pay local rates from now til the end of the year? Meaning from October to December (3 months)

2. What happens in 2019, starting January, do I have to clock in 182 days all over again? And have to pay 28% again?

3. If no, what happens? Does the COR expire? What do I do? Can I continue to pay resident rates?

Thank you!

The COR is valid for a single tax year in your case 2018. You will pay normal resident rates from the date you reached 182 days. If you expect to work here for at least 182 days in 2019 there is nothing special to watch out for. However if you plan to leave earlier you would need to make sure you limit your personal travel to 14 days because you would need to link the shorter period in 2019 to 182 consecutive days in 2018.. I'll post a link with some examples to read.

This is the link which gives examples

http://lampiran2.hasil.gov.my/pdf/pdfam/PR_11_2017.pdf

Thanks Gravitas,

One last question, this means that I can just proceed and continue to pay resident rates in 2019 onwards right?

Do I have to reapply for COR?

Thank you!

Yes you will pay resident taxes in 2019. You don't need to apply for a COR necessarily. But the certificates can be used to avoid Double Taxation.

I had similar questions and Gravitas your explanation is pretty good.

Let me know if the below paraphrase is correct:
1. In a tax year, if I stay for more than 182 days in Malaysia I will be considered a resident by tax office.
2. 14 days absence rule becomes important only if I want to link two tax years.
3. I can be outside Malaysia for more than 14 days and in 2019 but still be a resident from the date when I complete 182 days + number of days of absence.
4. Once I am a resident for 2019, I can retroactively  claim the expat taxes I paid when I file my taxes for the YE 2019.