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You may also be eligible for certain tax relief benefits or exemptions,
so it's worth doing some research to find out how you can make the
most of your situation.
If you are working in the country for more than 60 days but less than
182 days in one year, you will be considered a “non-resident” and
subjected to a flat taxation rate of 28%. As a non-resident, you will
also not be eligible for any tax deductions.
If you are working in Malaysia for more than 182 days a year, the
government considers you to be a “tax resident,” and you will pay
progressive tax rates and be eligible for tax deductions. Malaysia's
progressive personal income tax system involves the tax rate
increasing as an individual’s income increases, starting at 0% for up
to RM5,000 earned, to a maximum of 28% for annual income of over
RM1 million.
Only income that has its source in Malaysia is taxable in the country,
regardless of where you are paid. However, there are some
exceptions to this territorial principle. Malaysia has signed numerous
Double Taxation Avoidance agreements, so certain nationalities will
be exempt from paying personal income tax in Malaysia if their earned
income is taxed in their home country. If your income is derived from
specific industries, such as air transport or banking, a worldwide basis
for taxation is applied instead of the territorial principle.
To complete your tax return, you will need details of the total amount
paid to you during the assessment year. This Yearly Remuneration
Statement (EA form) is issued by the end of February each year.
You can file your tax return either online via e-filing or manually. For
e-filing, you first must register as an online user by either going to the
nearest IRBN office or by sending an email to pin@hasil.gov.my and
attaching a copy of your passport. Alternatively, if you'd rather go
through the process manually, you can go to your nearest IRBM office
to obtain the relevant form. Form B is for individuals who have a
business in Malaysia, so won't apply to you if you are employed by a
company. Form BT is for an individual who has been approved as a
skilled expert. The most common forms for expatriates are Form BE,
which is for those who are employed by a company, and Form M,
which is for non-residents.
If you buy a property in Malaysia, you will also need to pay Stamp
Duty, which is a tax that is levied on the legal recognition of the S&P
Agreement and Loan Agreement when you buy a house. You can
calculate the stamp duty that you will owe on a property on the
government's Valuation and Property Services Department website.
Road tax
Road tax and car insurance are compulsory in Malaysia. The road tax
structure in Malaysia varies depending on the type of car, its engine
capacity, the region and the type of ownership. Cars with less than a
1.6 litre engine capacity get charged a fixed base rate, which varies
depending on the type of car and whether it's a company-registered or
private vehicle. While cars that have bigger than a 1.6 litre engine are
subject to a progressive rate, as well as a base rate. Basically, the
bigger and more expensive your car, the more you can expect to pay
in road tax.