Attention to expatriates working in Malaysia: Before renewing your employment pass (EP), ensure you have submitted your income tax to the nearest LHDN/Inland Revenue Board of Malaysia (IRB) and settled any tax liabilities.
It is compulsory for all expatriates to fulfill their tax obligations, as failure to do so could jeopardize the renewal of your professional work visa. Failure to comply may result in the inability to maintain a valid permit to stay in Malaysia, necessitating arrangements to leave the country.
Assessment Year 2020
Tax relief and deductions
Expatriate workers who qualify as tax residents in Malaysia are entitled to various tax deductions and benefits provided by the government. These benefits encompass:
Tax relief for a non-income-earning spouse.
Tax relief for taxpayers who incur parental care expenses.
Tax relief for each child under the age of 18.
Tax relief for children pursuing tertiary education.
Compliance and payment
In Malaysia, the tax year aligns with the calendar year, commencing on January 1 and concluding on December 31. All tax filings must be completed and submitted by April 30 of the subsequent year.
To file income tax, expatriates must acquire an income tax number from the IRB. Typically, companies procure income tax numbers for their foreign expatriates. However, if a company fails to do so, expatriates can register for an income tax number at the nearest IRB office.
Should an expatriate inaccurately report their tax return, either by omitting or understating their income, the IRB has the authority to levy a fine equivalent to 100 percent of the undercharged tax.
Late submissions of income tax may incur a penalty, comprising a 10 percent increase of the tax payable.
Expatriates residing in Malaysia for over 60 days but less than 182 days are categorized as non-tax residents and are subject to a tax rate of 30 percent. Foreign expatriates are advised to consult registered local tax advisors to gain a better understanding of their tax obligations.
