All income tax information is summarized by KPMG Tax Services Sdn. Bhd., the Malaysian member firm of KPMG International, based on the Malaysian Income Tax Act, 1967 (the Act).
Income tax is imposed on a territorial basis. Individuals, whether resident or non-resident in Malaysia, are taxed on income accruing in or derived from Malaysia. Foreign income remitted into Malaysia is exempted from tax.1
The income of a resident individual is subject to income tax at progressive rates after personal relief while the income of a non-resident individual is subject to income tax at the top marginal rate without personal relief.2
Non-resident individuals may claim tax exemption on their Malaysian employment income if they exercise employment in Malaysia for a period or periods of 60 days or less in a calendar year or for a period of not more than 60 days if such period overlaps two calendar years.3 However, if the individuals who are exercising employment in Malaysia for more than 60 days but less than 183 days, and are tax residents of a country in which Malaysia has a double taxation treaty, exemption may be available provided other conditions as stipulated in the double taxation treaty are met.
Malaysia has a current year basis of assessment. The basis period for a year of assessment coincides with the calendar year. The official currency of Malaysia is the Malaysian Ringgit (MYR).
Herein, the host country refers to the country to which the employee is assigned. The home country refers to the country where the assignee lives when he/she is not on assignment.
1Section 28, Schedule 6 of the Act.
2Schedule 1 of the Act.
3Section 21, Schedule 6 of the Act.