Tax in Malaysia

Tax In Malaysia

A Contractor’s Guide to Taxes :

One of the most consistently challenging aspects of contracting in Malaysia is complying with the country’s tax system. As well as paying tax in Malaysia, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income:

If you’re working in Malaysia under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Malaysia for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Malaysia, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in Malaysia through PAYE is left with the prospect of doing everything themselves.

Do you know much about Malaysian Tax Law? Does Malaysia have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Malaysia can range from 0 to 28 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator:

If you are a contractor and want a calculation on your tax and net retention in Malaysia, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax :

Contractors in Malaysia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Malaysian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Malaysian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Malaysian tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax:

We work with numerous umbrella companies in Malaysia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Malaysia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Malysian work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Malaysia but without the overhead of directly dealing with the Malaysian tax authorities. Get in touch with us today for some reliable advice on tax in Malaysia!

When Do You Need to Lodge Your Tax Return?:
From 1st of March after the taxable year (calendar year)
Tax Filing Deadline :
30th of April for individuals without any income from a business source. 30th of June for individuals with income from a business source.
Can you file it online? :
Yes, https://ez.hasil.gov.my/CI/
Currency:
Malaysian Ringgit (MYR)
Tax-free Threshold in:
5000 MYR
Grossed Income:
From 5000 to 19,999
Tax Rate:
1%
Grossed Income:
From 20,000 to 34,999
Tax Rate:
150 MYR + 5% on excess of 20,000
Grossed Income:
From 35,000 to 49,999
Tax Rate:
900 MYR + 10% on exxcess of 35,000
Grossed Income:
From 50,000 to 69,999
Tax Rate:
2,400 MYR + 16% on excess of 50,000
Grossed Income:
From 70,000 to 99,999
Tax Rate:
5,600 MYR + 21% on excess of 70,000
Grossed Income:
From 100,000 to 249,999
Tax Rate:
11,900 MYR + 24% on excess of 100,000
Grossed Income:
From 250,000 to 399,999
Tax Rate:
47,900 MYR + 24.5% on excess of 250,000
Grossed Income:
From 400,000 to 599,999
Tax Rate:
84,650 MYR + 25% on excess of 400,000
Grossed Income:
From 600,000 to 999,999
Tax Rate:
134,650 MYR + 26% on excess of 600,000
Grossed Income:
1,000,000 and above
Tax Rate:
238,650 MYR + 28% on excess of 1,000,000
How long does it take to set up:
18 days
How much does it cost:
2060 MYR
Is it easy? :
Starting a Business Rank: 111. Low ranking means that starting a business is difficult.
How to File Taxes in:

The process of filing taxes in Malaysia involves:

Step 1: Register as a taxpayer with LHDN (Lembaga Hasil Dalam Negeri) here(link is external).

Step 2: Register for online filing through ezHASil.

Step 3: Select the appropriate tax form:

  • BE form: resident individuals without income from a business source.
  • B form: resident individuals with income from a business source.
  • M form: non-resident individuals with/without income from a business source.

Step 4: Collect the appropriate documentation to complete the tax return.

  • Documents relating to tax reliefs for medical expenses, education fees, disabled individual, mortgage and insurance.
  • Documents regarding tax rebates.
  • Documents regarding tax exemptions.

Step 5: Electronically sign the form.

Step 6: After submitting the tax return, any tax refund will be credited to the taxpayer’s accounting within 30 working days. Any taxpayers who do not receive a refund within 30 working days will be compensated.

Notes:

The above rates are applicable to resident taxpayers.

A non-resident individual that earns Malaysian income is taxed at a flat rate of 28%.

Does the 183 day rule apply in:

Yes

When do you become a tax resident in:
  • You are physically present in Malaysia for more than 182 days in a calendar year or for 182 consecutive days.
  • You are present in Malaysia during the calendar year for at least 90 days and have been resident or present in Malaysia for at least 90 days in any 3 of the 4 preceding years
Am I taxed on my global income in:

No, only Malaysian-sourced income.