Non Resident – Part 1

One of the most important aspect of personal taxation for foreigners and non resident.

The determination of paying flat rate (27%) or at scale rate.

One of the many confusion is the no of days stayed especially when 2 periods are covered.

If you are confuse, let me enlighten you.

Rule 1. Basically you need to be in Malaysia physically for more than 182 days in 1 calendar year.

If you start work in Malaysia anytime before 1 July, you are quite safe.

If you start work in Malaysia anytime after 2 July, you’ll be paying tax at a flat rate of 27% (current rate).

Another confusing part is the first 6 months period (which is also around 182 days) non resident and foreigners have to pay a monthly flat rate of tax at 27% or at the current prevailing rate.

Paying the first 6 months monthly 27% tax has nothing to do with you staying in Malaysia for 182 days ok ?

Actually through some non written rule, if you have a work permit, the 6 month rule should not apply. Simply because work permits normally are for a minimum of 2-3 years. But somehow nowadays immigration has been issuing temporary work permits that last only 1 year or less.

And of course employers are afraid of run away employees and left with paying the outstanding taxes.