Taxation in Malaysia for Non-Resident Individual


Under Malaysian Tax Law, both Residents and Non-Resident are subject to Income Tax on Malaysian source income.

Residents and Non-Resident status will give a different tax regime on income earned/received from Malaysia. So it is very important to identify whether you are Residents or Non-Resident in regard to Malaysia Tax Law.

An Individual will be considered Non-Resident for Income Tax purpose if the individual is physically present in Malaysia for less than 182 days during the calendar year regardless of the citizenship or nationality. The 182 days period can be consucative period or not.

If the individual is Resident in regard to Malaysian Tax Law, the individual is subjected to normal income tax.

However, if the individual is Non-Resident in regard to Malaysian Tax Law, the income tax rate is higher when compare to Resident.

Non-resident Tax rate is tabulated in the table below,

Types Of Income Rate (%)
Business, trade or profession 25 (With Effect From Year Assessment 2015)

26 (Year Assessment 2010 – 2014)

Employment
Dividends
Rents
Public Entertainer 15
Interest
Royalty 10
Payments for services in connection with the use of property or installation, operation of any plant or machinery purchased from a non-resident
Payments for technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme
Rent or other payments for the use of any movable property

However, Non-Resident Individual will not be taxable if

  1. Employed in Malaysia for less than 60 days
  2. Employed on board a Malaysian ship
  3. Age 55 years old and receiving pension from Malaysian employment
  4. Receiving interest from banks
  5. Receiving tax exempt dividends

If taxable, you are required to fill in M Form .



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