Tax is a topic that we all prefer to ignore. However, as an ex-pat, it’s necessary to understand how the tax laws in Malaysia affect you.
Need to know
The Malaysian tax year runs from 1 January to 31 December.
Tax returns are to be lodged by 30 April.
The tax authority is the IRBM, The Inland Revenue Board of Malaysia.
For tax purposes, you are a resident if you have lived 182 days in a calendar year in Malaysia.
You can use an income tax calculator to estimate your taxes.
Consult the Inland Revenue Board of Malaysia website for all tax-related queries and which form you need to file.
It’s often advisable to employ a reputable tax agent to assist you with your tax return and any tax-related queries.
What taxes apply to ex-pats?
The amount of tax payable in Malaysia depends on your residence status and the kind of visa you have.
Holders of the MM2H visa, Malaysia My Second Home, pay no tax on their earnings. This visa is a government initiative to attract foreign investors and promote Malaysia as a safe and positive country to live in for foreigners.
If you qualify as a resident in Malaysia, you will pay the same amount of tax as Malaysians.
Taxable income of RM 50,001 to RM 70,000 pay 13% tax
Taxable income of RM 70,001 to RM 100,000 pay 21% tax
Taxable income of RM 100,001 to RM 250,000 pay 24% tax
Taxable income of RM 250,001 to RM 400,000 pay 24.5% tax
With over RM 2,000,001 paying 30% tax
Non-residents are taxed at a flat 30% on all income.
Goods and Services Taxes in Malaysia
The GST in Malaysia is known as Sales and Services tax SST and is 10 % on most goods and services.
SST is reduced to 6 % for restaurants, hotels and accommodations, car hire, domestic flights, insurance, credit cards, legal and accounting, business consulting, electricity, pay-TV, and digital supplies.
SST is reduced to 5 % for food and petrol and building materials.
The SST is payable by the consumer in the price of the goods or services.
Capital Gains Tax
If you decide to sell a property, business, or residential, you will be subject to tax on any profit.
In case your home sells at a loss, no tax will be payable.
No one looks forward to tax time. Completing one’s tax form is a stressful chore for most people, especially, when tax rules change each year. Therefore, it is advisable to consult a reputable tax agent who knows the ins and outs and can save you the most money.