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
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The Malaysian tax year runs from 1 January to 31 December.
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Tax returns are to be lodged by 30 April.
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The tax authority is the IRBM, The Inland Revenue Board of Malaysia.
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For tax purposes, you are a resident if you have lived 182 days in a calendar year in Malaysia.
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You can use an income tax calculator to estimate your taxes.
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Consult the Inland Revenue Board of Malaysia website for all tax-related queries and which form you need to file.
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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.
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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.
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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
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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.
In Conclusion
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.
