02 April 2006

Are you subject to Malaysian income tax?

There are two main factors in deciding whether you are subject to Malaysian income tax:
a. Whether you are resident of Malaysia (which depends on duration of your stay in Malaysia, regardless of your nationality or citizenship.)
b. Whether your source of income is from Malaysia or outside Malaysia.

Being a resident means, you have stayed 182 or more days in Malaysia during the assessment year (for individual it means the calander year).

1. If you are a non-resident and without source of income from Malaysia, you are not subject to Malaysian Income Tax. So even if you are a Malaysian working in Singapore with Singpore PR status and are travelling back often to Malaysia for holidays, most likely your stay in Malaysia is less than 182 days. So you are a non resident. Without an income source from Malaysia, you are not subject to Malaysia tax at all.

2. Even if you are a resident of Malaysia, your income from overseas, i.e. employment income, internet business income, dividend income from Singapore stocks, etc. are exempted from Malaysian Income Tax. You may want to declare it in your Tax return, but be careful of your calculation, these overseas incomes are tax exempted. You should not pay tax for your overseas incomes.

3. If you are a non-resident with source of income from Malaysia, you are subject to Malaysia Income Tax over the income source from Malaysia. There is a help book on Self Assessment System for Non resident from Lembaga Hasil Dalam Negeri (Inland Revenue Board) for download.

4. If you are a resident of Malaysia, and you have source of income from Malaysia...think what? Off course you have to pay tax.

Part 1: Malaysian income tax filing deadlines
Part 2: Malaysian income tax processes
Part 3: Are you subject ot Malaysian income tax?

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