MALAYSIA ACCOUNTING & TAXATIONPage index:Home > MALAYSIA ACCOUNTING & TAXATION > Details page

Foreign Employer Tax Guide

Update Date:2019-6-26 17:23:35 Source:Tannet (Malaysia) Sdn Bhd Views:146

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.

Previous:Corporate Tax In Malaysia

Next:Malaysia Inland Revenue Authority - Form E