Malaysia Tax Guide for Expatriate- An Overview

Malaysia Tax Guide for Expatriate outlines the tax rate for Malaysian Sdn Bhd Company as well as the foreign individual. The rates vary depends on the entity and income type. There is a total of 5 categories of different tax structure for the company and expatriates’ personal income summarized as follows:

A. Guidelines for Malaysia Sdn Bhd Company Taxation

For Resident Malaysian Sdn Bhd Company, a joint-venture company where Malaysian owned more than 50% shares:
Net profit for the first RM500,000 chargeable income is 19%. On subsequent chargeable income is 24%.

For non-resident Malaysian Sdn Bhd Company, can be joint-venture or solely owned by foreigners as long as the shareholding by foreigners is more than 50%:
Net profit tax rate will be flat at 24%, disregards the amount of profit made during the year.

Know that once your Malaysia company has been incorporated, you need to appoint a Tax Agent for your company and he/she should register with the Inland Revenue Department to get a tax file number for the company. Your company needs to prepare accounting documents, which are subject to a yearly audit by a licensed auditor, which you need to appoint. [Read: Roles of the Taxation Agent]

B. Guidelines for Personal Taxation:

As a foreigner who receives any income (salary, bonus and fees) from the Company, you are required to pay tax. Your personal tax rate depends on your status, which is determined by the length of your stay in Malaysia during the calendar year. For individual foreigners to eligible for resident status eligibility, he is required to stay in Malaysia for more than 182 days in a calendar year. The resident tax rate is reasonable, range from 0 to 28% with applicable to many incentives and rebates as opposed to a flat rate of 28% for non-resident status.

Guideline for Resident Status Eligibility for individual foreigners:

  • Stay in Malaysia more than 182 days in a calendar yearMalaysia Tax Guide for Expatriate
  • The tax rate will be 0 – 28%
  • Available for personal relief and various tax incentives 

Personal Tax Rate for residents will be subjected to chargeable band range from 0-28%. View the latest rates and complete list of relief available for residents for your tax saving.

Guidelines for Non-Resident Status Eligibility for individual foreigners:

  • Stay in Malaysia less than 182 days in a calendar year, no tax incentives and relief allowed
  • Income on salaries and fees, tax rate is flat at 28% 
  • Withholding Tax is applicable range from 5% to 15% disregards whether the service is performed in Malaysia or not.

The last filing date for the personal tax is 1st April every year. You need to register with the Inland Revenue Department to get a tax file. The Malaysia Inland Revenue Department encourages on-line submission for your yearly tax return or you may opt to hire a licensed tax agent to file the submission on your behalf. for more info on Personal Tax Compliance, please click here!

C. Malaysia Tax Guide for Expatriate – Labuan International Company

For Labuan International Company entity, the tax rate is 3% on net profit. For expatriates working under the Labuan International Company are eligible for personal income tax rebate of 50%, a special provision until Year 2020. All directors’ fee is fully tax exempt. For more, please refer to www.LabuanBusinessTax.com. 

D. Malaysia Tax Guide for Expatriate – Representative/Regional Office

There is no tax for the Company for Representative/Regional Office set-up in Malaysia. All income receivable by expatriates working under the Representative/Regional Office will be subject to the personal income tax rate of 0-28% for resident status or a flat rate of 28% for non-resident status. 

E. Malaysia Tax Guide For Expatriate Under Malaysia My Second Home Program (MM2H)

There will be no tax imposed on Malaysia My Second Home participants as long as he/she did not receive all income in Malaysia.
[Read: Complete info on tax for MM2H participants]

For complete info for all category, please refer to Malaysia Inland Revenue website at www.hasil.gov.my. Feel free to contact us by email contact@malaysiabiadvisory.com if you need assistance on the filing of your tax.