Tax information for Expatriate

1. Any income derived from Malaysia is subject to Malaysia income tax each year.
2. Income from sources outside Malaysia is exempted from tax , e.g. pension & dividend.
3. Types of income subject to tax :
• Business , trade or profession
• Employment
• Dividend , interest or discounts
• Rents , royalties or premiums
• Pensions , annuities or periodical payments
• Gains or profits not falling under any of the foregoing paragraph
• Income of a non resident in respect of technical advice, assistance or services rendered in connection with any technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme.
4. Tax rate :
• The tax rate for an individual will depend on his/her residence status. Generally , a non resident individual is taxed at a flat rated of 27% without any personal deductions. Income under (g) above is taxed at 10% on gross income.
• A resident individual is taxed at a scale rate of tax from 0% - 27% on chargeable income after personal deductions.
5. Residence status of an individual for tax purposes is determined not by nationality but by the length of stay in Malaysia. The status is determined for each calendar year. For example , the individual will be considered as a resident if he / she stay :-
• in a year amounting to 182 days or more in Malaysia; OR
• if less than 182 days in a year but that period is linked to another period of more than 182 consecutive days; e.g. from 01/03/2003 to 31/12/2003 = more than 182 days & from 01/01/2004 to 31/01/2004 = 31 days, therefore he is tax resident for 2003 and 2004 ; OR
• if 90 days or more in a year and stayed 90 days or more / resident for three out of four preceding years of assessment e.g. 2000 , 2001 , 2002 – stayed 90 days or resident 2003 – stayed 90 days or more. Therefore he is tax resident for year of assessment 2003 ; OR
• is stayed less than 90 days or did not stay in Malaysia at all in a year but stayed as resident for three preceding years and the following year e.g. 2000, 2001, 2002 as resident, therefore he is tax resident in the year 2003.
6. How to inform IRBM regarding the chargeability to tax? If you are in receipt of income, you must notify your chargeability to tax to the nearest tax office and request for the tax return form.Submit the following personal particulars:
• Full name as in passport
• Date of birth
• Passport number
• Nationality
• Sex
• Present correspondence address
• Statement of income earned / derived from Malaysia
7. The individual who does not carry on a business will need to submit the tax return by 30 April of the following year. The individual who carries on a business such as a sole proprietor or a partnership will need to submit the tax return form by 30 June of the following year.

Individual Income Tax Return Season - YA 2009 - Reliefs

Long time no see my friends!

Since now is reaching the Individual Income Tax Return season (for employment income earners only, like me!), I guess it's time to remind you, if you own a company, that you are obliged to distribute EA form to your employees by end of February 2010.

For individuals whom are still trying to find out the reliefs (only for residents!), here's a complete but simple table for you to know what can be exempted:-

• Personal relief  - RM8,000
• Further self relief - disabled - RM6,000
• Wife / Husband relief  - RM3,000
• Further wife/ husband relief - disabled - RM3,500
• Parents’ medical expenses (maximum)  - RM5,000 
• Disabled relief (maximum) - RM5,000 (for purchase of basic supporting equipment for self, wife, child or parent)
• Expenses on supporting unmarried children:
• Below 18 years of age - RM1,000
• Disabled child - RM5,000
• Over 18 years old (pursuing tertiary education at university or college) - RM4,000
• Life insurance and/or contributions to approved provident funds (maximum) - RM6,000
• Handicapped child reliefs - RM5,000
• Medical/education insurance (maximum) - RM3,000
• Annuity premium on annuity purchased through EPF Annuity Scheme - RM1,000
• Purchase of books & similar publication - RM1,000 (maximum)
• Fee of acquiring law, accounting, Islamic finance, technical, vocational, industrial, scientific or technological skills or qualification. In cases of post graduate studies, no restrictions on the field of study. - RM5,000
• Purchase of books, journals and magazines and other similar publication (excluding newspapers) - RM1,000
• Purchase of computer for once every three years with effect from the year of assessment 2007 - RM3,000

The tax charged on a resident individual is reduced by way of the following rebates:

1. An individual with a chargeable income not exceeding RM35,000 enjoys a rebate of RM350. Where the wife is not working or the wife's income is jointly assessed, she also enjoys a further rebate of RM350. Similarly, a wife who is assessed separately will also enjoy a RM350 rebate, provided her chargeable income does not exceed RM35,000. Effective year of assessment 2009, the rebate shall be increased from RM350 to RM400. 
2. Any fee paid to the government for the issue of an employment pass, visit pass or work permit.