Job Discussion Forums

[bule_boy69]

Hi all...

After reading some old stuff on here and having a bit of a google, I'M STILL more than a bit confused about Malaysian tax.

I'm looking at high school jobs starting in Aug this year...

So unless I'm mistaken ... I would have to pay 26% tax as I could not become a resident for tax purposes (resident 182 or more days).

Is that refundable if resident for tax purposes in 2017 or not?

If not oh well....., but what about the following year? I've read posts somewhere that suggest if people take holidays over 14 days at a time they lose their tax residency. Really?

If anyone there could clarify the situation for me I'd appreciate it.

Thanks

[pooroldedgar]

I worked in Malaysia twice. The first time I went I paid 26% tax for six months, then no tax for six months, then 16 percent for the duration.

The second time I went I paid 26% for 6 months, then 16% for the duration. I believe I will be getting the differnce for those latter six months refunded this tax season. Maybe.

[jimmiethefish]

Firstly, your tax residency is calculated from the date you enter Malaysia for the purpose of work (even if you come in on a social visit pass which is later converted to a working visa), not the date you start. I got very lucky with this as I arrived several days early to enjoy a short holiday before starting my job and so had exactly 182 days tax residency. Several colleagues were not so lucky so ended up in the same position as you.
Basically, you will have to pay the higher rate of 26% until you have been in Malaysia for 182 days consecutively in the same financial year. There is leeway for a short amount of time outside the country for specific purposes during this period so you must be careful about holiday travel. Your HR staff should be able to inform you about this.
You will become a tax resident 182 days into 2017. Following this, your tax rate should be reduced to the appropriate level. Some employers may reduce it down further to negate tax paid and even it out for the year but mine didn't. Until you have established residency you must restrict international travel to the limits and check about days of departure and arrival - I'm pretty sure they count as residency days. Some of my colleagues did get a refund for their first financial year even without 182 days as it linked into the next financial year however this could not be claimed for one more tax cylce. Some did not qualify as they were out of the country on 31 December and 1 January therefore breaking the link between tax years.
It is possible to apply for an early tax assessment but I would only go down this path if it would mean financial hardship otherwise. It is a very long, labourious and frustrating process. It's easier to just follow the normal tax cycles and get your refund then, if one is owed.
Tax returns are filed online and paid into your bank account. Your HR staff should help you with this. You can file from overseas for your final year and be refunded into an international account. I have read stories of this taking a long time in the past but hopefully the e-filing system is coping better now (I'm an optimist). Your employer also has to file for an end of contract tax assessment (whether you are leaving the country or going to another job) before you get your final pay.
People should also note that the 182 days of tax residency applies in their final year of work as well and not get caught out with international travel over the preceeding 31 Dec and 1 Jan otherwise you will break the 'link' between tax years, your rate will go back up to 26% and you might even lose your final pay as well as still owe the tax department. Better safe than sorry when it comes to tax departments.

[bule_boy69]