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Malaysia - Income Tax
Residency for Tax Purposes
In Malaysia, regardless of citizenship, if an individual satisfies any of the following criteria then he / she is considered to be liable for income tax:
1. The individual has been resident in Malaysia for 182 days of the tax year
2. The individual has been resident in Malaysia for less than 182 days of the tax year, but was resident in the country for a total of 182 consecutive days linked to days from the year immediately preceding or following that tax year
3. The individual has been resident in Malaysia for at least 90 days of the current tax year and was resident in Malaysia for at least 90 days in three of the four preceding years
4. The individual will be resident in Malaysia in the year following and has been resident in Malaysia in the three years preceding the one being taxed.
Anybody fulfilling any of these criteria is liable to pay income tax in Malaysia. Individuals who spend less than 182 days per year in the country are classed as non-residents and are subsequently subject to different tax regulations. Retired individuals above the age of 55 are exempt from income tax, as are those receiving a pension from their employment in Malaysia or living off bank interest. Individuals who have less than 60 days employment in the country in a tax year are not liable to pay income tax either.
Even if you are not a Malaysian citizen, if you have a total of more than 60 days employment in the tax year, and if you are resident in the country for more than 182 days, then you are liable to pay income tax as a British expatriate.
Income Tax rates (for 2013)
Chargeable Income - Tax Rate - Cumulative Tax
RM 0 – RM 2,500 0% RM 0
RM 2,501 – RM 5,000 1% RM 25
RM 5,001 – RM 10,000 3% RM 175
RM 10,001 – RM 20,000 3% RM 475
RM 20,001 – RM 35,000 7% RM 1,525
RM 35, 001 – RM 50,000 12% RM 3,325
RM 50,001 – RM 70,000 19% RM 7,125
RM 70,001 – RM 100,000 24% RM 14,325
RM 100,001 and above 26%
The type of form you will have to fill out depends entirely on your source of income. You can now fill out the forms online at www.hasil.gov.my. This website often comes up automatically in Malay, but there is an icon in the top right hand corner of the page which allows you to switch the language to English.
The deadlines for the submission of return forms are as follows:
1. BE Form, for individuals whose income is without business source the deadline is 30th April every year
2. B Form, for individuals whose income includes business source, the deadline is 30th June every year
3. M Form, for a non-resident individual (resident in Malaysia for less than 90 days in the tax year) whose income is without business source, the deadline is 30th April every year
4. M Form, for a non-resident individual (resident in Malaysia for less than 90 days in the tax year) whose income includes business source, the deadline is 30th Jun every year
5. P Form, for a partnership, the deadline is 30th June every year.
UK / Malayisa Double Taxation Agreement
There is a (very lengthy) document which outlines the double taxation agreement established between the UK and Malaysia in 1996. A full copy of this document can be found by clicking on the following link: www.hmrc.gov.uk/taxtreaties/in-force/malaysia.pdf .
The objectives of the DTA are quite simple:
1) to create a favourable climate for foreign investments
2) to make Malaysia’s special tax incentives completely effective for taxpayers of foreign countries
3) to prevent tax avoidance and evasion
4) to obtain more effective relief from double taxation when compared to the relief available under unilateral regulations.
If you have any questions about income tax whilst in Malaysia, the best thing to do is to give the tax office hotline a call. Their information is as follows:
Inland Revenue Board of Malaysia
Tel: 00 60 3 1800-88-2716