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Malaysia Personal Income Tax Guide For Expatriate Employment Pass Visa Holders

Attention to expatriates who works in Malaysia. Before you can renew your employment pass (EP), have you gotten your income tax submission to your nearest LHDN / Inland Revenue Board of Malaysia (IRB) and paid the tax?

It is mandatory for all expatriates to pay taxes and failing to do that may risk the chances of your professional work visa renewal. The consequences is you wont able to have valid permit to stay in Malaysia and has to make arrangement to leave the country.

Lets look at the Malaysia Income Tax Guide below.

Assessment Year 2020

Chargeable Income

Calculations (RM)

Rate %

Tax(RM)

0 – 5,000

On the First 5,000

0

0

5,001 – 20,000

On the First 5,000
Next 15,000

1

0
150

20,001 – 35,000

On the First 20,000
Next 15,000

3

150
450

35,001 – 50,000

On the First 35,000
Next 15,000

8

600
1,200

50,001 – 70,000

On the First 50,000
Next 20,000

14

1,800
2,800

70,001 – 100,000

On the First 70,000
Next 30,000

21

4,600
6,300

100,001 – 250,000

On the First 100,000
Next 150,000

24

10,900
36,000

250,001 – 400,000

On the First 250,000
Next 150,000

24.5

46,900
36,750

400,001 – 600,000

On the First 400,000
Next 200,000

25

83,650
50,000

600,001 – 1,000,000

On the First 600,000
Next 400,000

26

133,650
104,000

1,000,001 – 2,000,000

On the First 1,000,000
Next 1,000,000

28

237,650
280,000

Exceeding 2,000,000

On the First 2,000,000
Next ringgit

30

517,650
. . . . .

 

Tax relief and deductions

The Malaysian government offers several tax deductions and benefits that expatriate workers who qualify as tax residents are eligible for.

These include:

  • Tax relief for a spouse (so long as the spouse does not earn an income in or out of Malaysia);
  • Tax relief for taxpayers who have to pay parental care;
  • Tax relief for each child below the age of 18; and
  • Tax relief for children studying at the tertiary level.

 

Compliance and payment

In Malaysia, the tax year runs in accordance with the calendar year, beginning on January 1 and ending on December 31. All tax returns must be completed and returned before April 30 of the following year.

To file income tax, an expatriate needs to obtain an income tax number from the LHDN / Inland Revenue Board of Malaysia (IRB). Typically, companies obtain income tax numbers for their foreign expatriates. However, if a company fails to obtain one, the expatriates can register for an income tax number at the nearest IRB office.

If an expatriate makes an incorrect tax return either by omitting or understating their income, the IRB has the right to fine that individual 100 percent of the undercharged tax.

Late income tax submissions may result in a disciplinary fee amounting to a 10 percent increment of the tax payable.

Expatriates working in Malaysia for more than 60 days but less than 182 days are considered non-tax residents and are subject to a tax rate of 30 percent. Foreign expatriates should seek help from registered local tax advisors to better understand their tax liabilities.

Article source: Malaysia Personal Income Tax Guide For Expatriate Employment Pass Visa Holders

 

Should you need assistance from registered local tax advisors / book keepers for income tax submission, kindly contact us.