Malaysia Hotline: +603-2141 8908
Under
normal circumstances, foreigners should first understand Malaysia's tax system
before they arrive in Malaysia. First of all, as long as the wages related to
the Malaysian engagement are all taxable income in Malaysia. The following will
explain the taxation for foreign employers.
1. What are the main differences between
tax residents and non-tax residents?
a)
The tax rate for Non-tax residents (foreigners) is
28% and does not have any tax exemption or rebate eligibility.
b)
The tax rate for tax residents (locals) ranges
from 0% to 28% (based on salary) and is eligible for personal tax deductions
and rebate eligibility.
2. What are the foreign employers need to
know?
a) The employer must submit the CP22 form (the new
employee employment notice) to the Malaysian Inland Revenue Authority (LHDN)
within one month of the employee's commencement of work.
b) Regarding the pension, you can choose to
continue to pay your national (foreign) pension scheme (this is a
non-deductible tax) or the Malaysian Employees Provident Fund (EPF).
c) EPF can get paid up to RM 6, 000 each year of
income tax relief to offset employment. However, pension schemes in some
countries may also get tax relief, but is required to obtain the approval of
the Inland Revenue Board of Malaysia.
d) The employer must deduct the monthly advance tax
from the employee's salary (such as salary, bonus, in-kind benefits and
accommodation benefits) based on the monthly tax deduction form and pay the tax
to the Malaysian Inland Revenue Authority before the 15th of each month. The
total amount of this tax will be deductible from the employee's final tax
liability.
e) Foreign employees who have taxable income during
the year of assessment must declare their personal income tax forms by April 30
of the following year.
3. How to declare an individual income tax
form?
a) Go to http://edaftar.hasil.gov.my/dafsgjpn.php and fill in the profile form.
b) After completing the personal profile, the
employer needs to upload his or her ID card. The uploaded ID card is only the
front page, black and white or color. The most important size is between 40k
and 60k. The name of the photo can only be letters or numbers.
c) After completing the above procedures, you can
get the personal income tax application number (No. Permohonan).
d) After you have received your application number,
you will need to wait approximately 3 business days before you can use the
application number to check the status of your application at http://edaftar.hasil.gov.my/info.php.
e) After completing the step 4, the employer needs
to go to the tax office to collect No. Rujukan. No. Rujukan is the reference
number for the employer's personal income tax. The income tax reference number
is an extremely important number in the tax return. In the future, the income
tax reference number will be required for tax return.
4. The benefits of tax return
Tax
returns can create a good “reputation” for individuals. This so-called
"reputation" can be used as evidence of the income certificate of
foreign employees. In the future, when the bank loans, car loans, personal
loans, or any financing, the bank will be convinced by them, so that the loans
can be easily get approved.
Are
the taxes in Malaysia too complicated? Still do not know how to file tax or pay
taxes? Tannet can help you solve this problem by simply providing your
information and income tax number. For more information, please feel free to
call the Tannet service hotline: 603-2141 8908 or email tannetmy@gmail.com,
Malaysia company address: Unit 6.06, Level 6, Amoda 22, Jalan Imbi 55100 Kuala
Lumpur.