Академический Документы
Профессиональный Документы
Культура Документы
WORKING IN MALAYSIA
EXPATRIATE EMPLOYEES WORKING IN MALAYSIA
Page
1 Scope of tax 1
2 Employment income 1
5 Exemption 2-3
Appendix
1. SCOPE OF TAX
An individual is taxed on his income accruing in or derived from Malaysia. He will not be
taxed on any income received in Malaysia from outside Malaysia.
2. EMPLOYMENT INCOME
Under the Malaysian Income Tax Act, employment income is deemed to be derived from
Malaysia:-
c. For any period during which the employee performs outside Malaysia duties
incidental to the exercise of the employment in Malaysia.
i. Any wages, salary, remuneration, leave pay, fees, commission, bonus, gratuities,
perquisites or allowance, payment of household expenses, club subscriptions,
subsidized interest on loan, school fees for children (whether in money or
otherwise);
iii. The value of the use of or enjoyment of any benefits or amenities (e.g. use of
company’s motor vehicle, provision of food, clothing, household furniture, driver’s
services, club membership);
3.1 For residents, the rate of tax is on a graduated scale on the chargeable income after
deduction of reliefs. The reliefs available and rates of tax are as shown in Appendices 1
and 2 respectively.
3.2 For a non-resident, the rate of tax is 28% on the gross income. No reliefs are available
to a non-resident.
The STD System applies to all employment income assessable under the Income Tax Act
1967. Basically, the above system refers to the deduction of tax by employers from
employees’ monthly emoluments based on a schedule which pre-determines the amount
of tax to be deducted. The STD system also applies to expatriate employees. It is the
Inland Revenue‘s policy to collect tax in advance (PAYE) in respect of an expatriate
employee by monthly salary deduction.
For example, tax payable for Year of assessment 2006 (i.e. based on income earned in
2006) will be settled by means of monthly deductions in 2006. Upon submission in the
year 2007 of the income tax return for Year of Assessment 2006, the tax paid in
advance in 2006 will be utilized to set-off against the tax charged for Year of
Assessment 2006. Where there is a surplus deduction, the employees concerned can
apply for a refund of the tax overpaid. However, if the tax deducted in the year 2006 is
insufficient, the difference is required to be paid by 30th April, 2007
For those employees who are provided with taxable benefits-in-kind, the amount of tax
to be deducted can be determined based on the total remuneration received divided by
the number of months he is employed in a particular year. The advantage of this method
is that the final tax payable will be almost the same amount of tax deducted.
5. EXEMPTION
The income of an individual who is not a tax resident, from an employment exercised in
Malaysia is exempted from tax where the employment is exercised for the following
period(s):-
a. for a period or periods which together do not exceed sixty (60) days in a calendar
year; or
b. for a continuous period (not exceeding sixty days) which overlaps over two
calendar years.
2
5.2 Double Taxation Agreements
Period of more than 60 days but less than 183 days in Malaysia
Malaysia has signed double taxation agreements (DTA) with more than 60 countries.
Generally, the income of an individual from an employment exercised in Malaysia is
exempted from Malaysian income tax where the following conditions are satisfied:-
a. the employee is present in Malaysia for a period or periods not exceeding in the
aggregate 183 days (in the case of Singapore, 120 days) in the basis year;
b. the remuneration of the employee is paid by, or on behalf of, a person who is not
a resident of Malaysia; and
The precise conditions are provided in the DTA of the countries concerned.
The exemption would only apply to the period when the employment is exercised outside
Malaysia and would not be applicable for the number of days that the individual is
outside Malaysia for personal reasons or on vacation.
Managers
Directors
Offshore Company
3
B. WHAT YOU HAVE TO DO
An expatriate employee having a source of income in Malaysia for the first time is
required to notify the Inland Revenue within two months of arrival in Malaysia.
An expatriate employee is required to complete the Income Tax Return and submit it to
the Inland Revenue before 30th April of each year.
If you have not received an Income Tax Return by 31st March in each calendar year, you
must immediately write to the Inland Revenue (i.e. the branch which issued you with the
last Income Tax Return) for a Income Tax Return for the relevant year before 14th April.
An expatriate employee is required to obtain tax clearance before leaving Malaysia upon
expiry of his employment contract or cessation of employment.
To determine the tax residence of an expatriate employee for tax purpose for the
duration of his employment in Malaysia, the employee is required to submit his original
passport together with a photostated copy thereof to the Inland Revenue for
verification, before departure from Malaysia on completion of assignment.
It is therefore important for the expatriate employee to ensure that all his entries and
exits from Malaysia are properly recorded and stamped on his original passport. In the
absence of the original passport or any other documentary proof of his stay in Malaysia,
the Inland Revenue may tax the expatriate employee as a non – resident at the rate of
28% on his gross income without granting any personal reliefs.
Where a “smart” card is used for entering and leaving Malaysia, the expatriate employee
is required to obtain a summary of his movements into and outside Malaysia from the
Malaysian Immigration Department for every entry and departure to facilitate the
determination of his tax residence during the duration of his employment in Malaysia.
The expatriate employee is advised to retain the counterfoil of all his air tickets for easy
retrieval of information regarding his movements into and outside Malaysia.
Where the employee has already left Malaysia without his passport being verified by the
Inland Revenue, a photostated copy (complete passport) verified by the Malaysia
Embassy/Consular overseas is acceptable by the Inland Revenue.
4
APPENDIX 1
PERSONAL RELIEFS
RM
Taxpayer – personal relief 8,000
Wife – if she has no source of income or elects for combined assessment 3,000
Children:
Each child (below 18 years old) 1,000
Disabled child (unmarried) 5,000
Each child (including disabled child) above 18 years old studying in universities,
colleges or similar establishments –
Outside Malaysia (at degree level and above 4,000
In Malaysia (at diploma level and above 4,000
Medical expenses for taxpayer, spouse and children on serious diseases (include RM
500 for medical examination expenses) (Maximum) 5,000
Disabled person :
Taxpayer 6,000
Spouse 3,500
Supporting equipment for disabled taxpayer, spouse, children or parent (Maximum)
5,000
Fee for acquiring technical, vocational, industrial, scientific or technological , law, 5,000
accounting skills or qualifications (Maximum)
Purchase of books, journals, magazines and other similar publications for the use of
taxpayer, spouse or children (RM 1,000 effective from Year of Assessment 2007). 700
5
APPENDIX 2
RM
REBATES GIVEN TO TAXPAYER
Individual
- chargeable income not exceeding RM 35,000 350
Full rebate in respect of zakat, fitrah or any other Islamic religious dues paid
Rebate of RM 500 given to an individual or spouse for a year of assessment in respect of the
purchase, evidenced by a receipt, of a personal computer for non-business purposes. Rebate is
given once in every five years. (Effective from Year of assessment 2007, in the form of relief of
RM 3,000)
ANY FEE PAID TO GOVERNMENT FOR THE ISSUE OF AN EMPLOYMENT PASS, VISIT
PASS OR WORK PASS
6
APPENDIX 3
RM % RM
On the first 2,500 0 0
In excess of 250,000 28
7
APPENDIX 4 (1 of 3)
TAX RESIDENCE
For Malaysian income tax purpose, an individual is treated as a resident if he satisfies one of the
following conditions:-
a. He is Malaysia in that calendar year for a period or periods amounting in all to 182 days
or more;
b. He is in Malaysia in the calendar year for a period of less than 182 days; this period is
linked by or to another 182 or more consecutive days (throughout which he is in
Malaysia) as follows:-
A temporary absence from Malaysia shall be taken to form part of the 182 days or that
period, as the case may be, if he is in Malaysia immediately prior to or after that
temporary absence and the temporary absence is for the following purposes:-
1. connected with his service in Malaysia and owing to service matters or attending
conferences or seminars or study abroad;
EXAMPLE 1
1.6.2005 to
2005 205 Resident
22.12.2005
2.1.2006 to
2006 90 Resident
30.4.2006
8
APPENDIX 4 (2 of 3)
EXAMPLE 2
1.8.2005 to
2005 150 Resident
28.12.2005
4.1.2006 to
2006 209 Resident
31.7.2006
c. He is in Malaysia in that calendar year for a period amounting in all to 90 days or more
having been with respect of each of any 3 of the calendar years for the 4 Year of
assessment immediately preceding that particular year of assessment either:-
i. a resident in Malaysia; or
ii. in Malaysia for a period or periods amounting in all to 90 days or more in the
calendar year in question; or
EXAMPLE
9
APPENDIX 4 (3 of 3)
d. He is resident in Malaysia for the calendar year following the particular year in question,
having been so resident for each of the 3 calendar years immediately preceding that
particular year.
EXAMPLE
10
The foregoing text reflects changes as at 30th September 2006 and does not incorporate subsequent
changes
The material contained in this publication is in the nature of general comment and information only and
neither purports, nor is intended, to be advice on any particular matter. Readers should not act or rely upon
any matter or information contained in or implied by this publication without taking any appropriated
professional advice.
RSM Robert Teo, Kuan & Co., RSM Tax Consultants Sdn. Bhd. and RKT Tax Consultants Sdn. Bhd. are
independent member firms of RSM International.
RSM International is a worldwide organisation of independent accounting and consulting firms driven
by a common vision of providing excellent professional services. RSM International professionals
commit their high skills, world-wide standards, and a common work ethic of innovative thinking to
develop results for their clients. Operating in more than 70 countries and bringing together the talents
of over 23,000 individuals in over 600 offices, RSM International is the 6th largest consulting and
accounting organization in the world and provides a full range of business advisory services to
companies in their own markets and internationally. Our mission of providing quality service through
high level thought, outstanding work and sound opinion, has resulted in annual billings approaching
US$2.5 billion across the organisation.
Any partner/ director in the offices of RSM Robert Teo, Kuan & Co., RSM Tax Consultants Sdn. Bhd. and
RKT Tax Consultants Sdn. Bhd. would be glad to meet those visiting Malaysia and to provide help and
advice where required.
Contact persons
11