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Malaysia - Income Tax

Income Tax

Taxation of international executives

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Related content

Tax returns and compliance
Tax rates
Residence rules
Termination of residence
Economic employer approach
Types of taxable compensation
Tax-exempt income
Expatriate concessions
Salary earned from working abroad
Taxation of investment income and capital gains
Additional capital gains tax (CGT) issues and exceptions
General deductions from income
Tax reimbursement methods
Calculation of estimates/prepayments/withholding
Relief for foreign taxes
General tax credits
Sample tax calculation

All information contained in this document is summarised by KPMG Tax Services Sdn Bhd., a company incorporated under the Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on Income Tax Act 1967 and relevant Public Rulings issued by the Inland Revenue Board (“IRB”) and Exemption Orders, Real Property Gains Tax Act, 1967, Employees’ Social Security Organization Act, 1969 and Employees Provident Fund Act, 1991 including all applicable subsequent amendments to the respective Acts.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

Tax returns of individuals with no business income (that is employment income and/or investment income) are required to be filed by 30 April of the following year.1 As for individuals who are carrying on business, the deadline for filing the tax returns is 30 June of the following year.2

What is the tax year-end?

31 December.3

What are the compliance requirements for tax returns in Malaysia?

Residents

The taxpayer who has no business income is required to file their tax return (Form BE) and pay their balance of tax by 30 April of the following year.4 As for a taxpayer who has business-source income, the deadline for filing the tax return (Form B) and payment of balance of tax payable is 30 June of the following year.

Non-residents

The non-resident taxpayer who derives employment income and/or non-business income is required to file their tax return (Form M) by 30 April of the following year. Any balance of tax payment would be due on 30 April of the following year, as well. As for a non-resident taxpayer who has business-source income, the deadline for filing the tax return and payment of tax payable is 30 June of the following year.

Tax rates

What are the current income tax rates for residents and non-residents in Malaysia?

Residents

Income tax table for 2018/2019

Chargeable income Base Tax 2018 Rate Base Tax 2019 Rate
Malaysian ringgit (MYR) MYR Percent    
First 5,000 0 0 0 0
Next 5,000 50 1 50 1
On 10,000 50 0 50 0
Next 10,000 100 1 100 1
On 20,000 150   150  
Next 15,000 450 3 450 5
On 35,000 600   600  
Next 15,000 1,200 8 1,200 10
On 50,000 1,800   1,800  
Next 20,000 2,800 14 2,800 16
On 70,000 4,600   4,600  
Next 30,000 6,300 21 6,300 21
On 100,000 10,900   10,900  
Next 50,000 12,000 24 12,000 24
On 150,000 22,900   22,900  
Next 100,000 24,000 24 24,000 24
On 250,000 46,900   46,900  
Next 150,000 36,750 24.5 36,750 24.5
On 400,000 83,650   83,650  
Next 200,000 50,000 25 50,000 25
On 600,000 133,650   133,650  
Next 400,000 104,000 26 104,000 26
Exceeding 1,0400,000 237,650 28 237,650 28

The employment income of an individual who is a knowledge worker and resides in a specific region (Iskandar, Malaysia) exercising employment with a person who carries on any qualifying activity (namely green technology, biotechnology, educational services, healthcare services, creative industries, financial advisory, and consulting services, logistic services, and tourism) would be taxed at the rate of 15 percent of their chargeable income. (Applicable for knowledge workers who apply and commence employment in Iskandar, Malaysia between 24 October 2009 and 31 December 2020. However, prior approval from the Iskandar Regional Development Authority is required before a knowledge worker could enjoy the tax rate of 15 percent.

The employment income of an approved individual under the Returning Expert Programme will be taxed at the rate of 15 percent of that chargeable income. The concession is for a period of 5 years.

Non-residents

The income of a non-resident individual is subject to income tax at 28 percent without personal relief.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Malaysia?

The residence7 of an individual is determined by their physical presence in Malaysia. An individual may qualify as a resident for the basis year for a particular year of assessment under any one of the following circumstances.

  • The individual is in Malaysia in the basis year for a period or periods totaling 182 days or more.
  • The individual is in Malaysia for less than 182 days in that basis year and that period is linked by or to another period of 182 or more consecutive days (hereinafter referred to in this paragraph as such period) throughout which the individual is in Malaysia in the adjoining year. Temporary absences from Malaysia due to service matters, attending conferences, seminars, or study abroad connected with the services in Malaysia, ill-health involving the individual or any immediate member of the family and social visits not exceeding 14 days in aggregate shall be taken to form part of such period or that period, as the case may be, if they are in Malaysia immediately prior to and after that temporary absence.
  • The individual is in Malaysia for a total of 90 days or more in the basis year and in any 3 out of 4 immediately preceding basis years, the individual was either resident or in Malaysia for at least 90 days.
  • The individual will be a resident for the year if they are resident the following year and has been resident for the immediately preceding 3 years

Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/territory for more than 10 days after their assignment is over and they repatriate.

No.

What if the assignee enters the country/territory before their assignment begins?

For the purpose of tax residency, their physical presence in Malaysia before the assignment begins will be considered in the determination of tax residence8.

Termination of residence

Are there any tax compliance requirements when leaving Malaysia?

It is the employer’s obligation to notify the Malaysian Inland Revenue Board (MIRB) of the termination of employment of an employee who is leaving Malaysia for more than 3 months. The notification is via filing of Form CP21 at least 1 month before the expected date of departure of the employee from Malaysia.9 The employer is also required to withhold any money in its possession owing to an employee who has ceased employment or is about to cease employment until the earlier of 90 days after the MIRB has received the Form CP21 or upon receipt of the tax clearance letter from the MIRB.10 A schedule of entries and departures to/from Malaysia and their original passport(s) which should cover their whole employment period in Malaysia have to be submitted to the MIRB for verification of their residence status together with the Form CP21 and duly completed and signed Malaysian tax return. The MIRB would review the documents and if satisfied, issue a tax clearance letter to inform the employee and their employer of any outstanding taxes to be paid.

What if the assignee comes back for a trip after residency has terminated?

The physical presence rule still applies for tax residency determination.11

Communication between immigration and taxation authorities

Do the immigration authorities in Malaysia provide information to the local taxation authorities regarding when a person enters or leaves Malaysia?

Currently, the immigration and tax authorities continue strategic cooperation on taxation matters relating to expatriates. The tax authorities launched the HASIL MY EXPAT system for internal use by the tax authorities to obtain information from the immigration to monitor taxation matters of expatriates in Malaysia.

Filing requirements

Will an assignee have a filing requirement in the host country/territory after they leave the country/territory and repatriate?

There would be no filing requirement for the assignee if they do not have any trailing income derived from Malaysia after their repatriation. However, it is important that the assignee clears their tax fully before they repatriate.

Economic employer approach

Do the taxation authorities in Malaysia adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Malaysia considering the adoption of this interpretation of economic employer in the future?

Yes

De minimus number of days

Are there a de minimus number of days13 before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?

Generally, it is 60 days. Under the Malaysian tax law, the income of a non-resident individual from an employment exercised by them in Malaysia for no more than 60 days in total in a basis year will be exempt from Malaysian tax.

Types of taxable compensation

What categories are subject to income tax in general situations?

The definition of employment income covers all forms of remuneration including benefits, whether in-cash or in-kind, received by an individual for exercising or having an employment in Malaysia.14 Therefore, an employee’s income with respect to their employment in Malaysia will be subject to Malaysian tax regardless of whether it is paid in Malaysia or outside Malaysia.

Gains or profits from an employment includes the following:

  • Cash remuneration, allowances and perquisites
  • Benefits-in-kind
  • Value of living accommodation
  • Refund from Unapproved pension or Provident Funds Scheme or Society
  • Compensation for loss of employment

Intra-group statutory directors

Will a non-resident of Malaysia who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Malaysia) trigger a personal tax liability in Malaysia, even though no separate director's fee/remuneration is paid for their duties as a board member?

Director fee or any remuneration received by a statutory director from a Company resident in Malaysia with respect to their directorship is liable to Malaysian tax.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Malaysia?

Yes, where director fees is received.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Malaysia (i.e. as a general management fee where the duties rendered as a board member is included)?

No

c) In the case that a tax liability is triggered, how will the taxable income be determined?

Tax-exempt income

Are there any areas of income that are exempt from taxation in Malaysia? If so, please provide a general definition of these areas.

  • One leave passage outside Malaysia is tax-free up to a maximum amount of MYR3,000 per year while three trips per year within Malaysia remains tax-free.33
  • Medical or dental benefits, including a benefit for childcare.34
  • Any sum received by way of gratuity on retirement from an employment due to ill health or if the retirement takes place on or after reaching the age of 55 or on reaching the compulsory retirement age of 50 but before 55 and that person has served not less than 10 years with the same employer is exempted from tax. A partial exemption of MYR1,000 for each completed year of service is granted with respect to any gratuity payment which does not fall under the above category.38

Income tax exemption on perquisite in relation to long service, past achievement, service excellence, innovation, or productivity awards of up to a maximum amount or value of MYR2,000. The exemption in respect of long service award shall only be given to employees who have served the same employer for more than 10 years.39

  • Travelling allowance, petrol card, petrol allowance, or toll payment for travelling in exercising an employment is exempted up to an amount of MYR6,000 per year.
  • Allowance or fees for parking.
  • Allowance or subsidies for childcare of up to MYR2,400 per year for children up to 12 years of age.
  • Telephone and mobile phone, telephone bills, pager personal data assistance, and internet subscription. The exemption given is limited to one unit for each asset.
  • Employers’ own goods which are consumable business products provided free of charge or at a discounted value where the value of the discount does not exceed MYR1,000 per year.
  • Employers’ own services provided free or at a discount provided such benefits are not transferable.
  • Subsidies on interest on loans totaling up to MYR300,000 for housing, passenger motor vehicles and education.

Expatriate concessions

Are there any concessions made for expatriates in Malaysia? 

Expatriates employed in a managerial capacity with a Labuan entity in Labuan is granted an exemption of 50 percent of their gross income from such employment up to YA 2020, provided the employment is exercised in Labuan. The exemption is also extended to an individual non- Malaysian citizen exercising an employment with a co-located office or marketing office of a Labuan entity approved by the Labuan Financial Services Authority which operates in other parts of Malaysia.

Expatriates would be taxed on the portion of employment income attributable to the number of days of employment exercised in Malaysia in respect of income derived from an employment with an approved operational headquarters, an approved regional office, International procurement centers, Regional Distribution centers or an approved Treasury Management Center.

Expatriates acting in the capacity of a director of a Labuan entity are exempted from payment of income tax in respect of directors’ fees received from YA 2007 until YA 2020.

Any payment received from participating in the Malaysian Technical Co-operation Programme (MTCP) by a non-resident individual who is non-Malaysian citizen is exempted from tax with effect from year of assessment 2007. MTCP is a technical co-operation program approved by the Economic Planning Unit Prime Minister’s Department of Malaysia.44

Salary earned from working abroad

Is salary earned from working abroad taxed in Malaysia? If so, how?

The salary earned from working abroad would not be taxable unless the income received is in respect of duties incidental to the exercise of employment in Malaysia.45

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Malaysia? If so, how?

Malaysia adopts the single-tier system, where dividends paid by a resident company would be tax exempt in the hands of its shareholders.47

Distributions received from certain approved unit trusts are tax-exempt.49

Certain specific types of interest (such as government savings certificates) are exempted from income tax.50

Interest income received by individuals resident in Malaysia from monies deposited in all approved institutions is tax-exempt.52

Distributions from real estate investment trusts (REITs) listed in Bursa Malaysia received by individuals will be subject to a final withholding tax:

Under the Real Property Gains Tax Act (“RPGT”) 1976, for disposals by an individual who is a Malaysian citizen or permanent resident, chargeable gains will be taxed as follows:

  • 30 percent for disposals within 3 years after acquisition 
  • 20 percent for disposals in the fourth year after acquisition
  • 15 percent for disposals in the fifth year after acquisition; and 
  • 5 percent for disposals in the sixth year after acquisition or thereafter.

There is a RPGT exemption on the disposal of a chargeable asset (other than shares) with consideration of MYR200,000 and below that is made in the sixth year after the date of acquisition by a Malaysian citizen disposer. This is effective from 1 January 2019.

For disposals by non-citizens, or an executor of the estate of a deceased person who is not a Malaysian citizen or permanent resident, the rate is 30 percent for disposals within 5 years after acquisition and 10 percent for disposals more than 5 years after acquisition. 56

Stamp duty

Stamp duty is chargeable on certain documents or instruments such as sale and purchase agreements, loan agreement and transfer of property etc. However, there are exemptions or remission available.

Rental Income

Rental income is assessed to tax on accrual basis for a calendar year.59 However, when the rental is received in advance, the advance rental would be taxed in the year of receipt. The expenses wholly and exclusively incurred in the production of the rental income are allowable as a deduction to arrive at a net rental income.

With effect from YA 2018 to YA 2020, there will be 50 percent income tax exemption on rental income from residential homes for Malaysian resident individuals where the legal tenancy agreement is between owner and tenant, and the rental income is less than MYR2,000 per month per residential home.

Foreign exchange gains and losses

Not applicable.

Personal use items

Not applicable.

Gifts

There is no such tax in Malaysia. Note that estate duties have been repealed with effect from 1 November 1991.

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Malaysia? If so, please discuss? 

Other than real property gains tax, there is no other CGT.

Are there capital gains tax exceptions in Malaysia? If so, please discuss?

Not applicable.

Pre-CGT assets

Not applicable.

Deemed disposal and acquisition

Not applicable.

General deductions from income

What are the general deductions from income allowed in Malaysia?

The following deductions are allowed.

  • Expenses wholly and exclusively incurred in the production of income (usually very few expenses qualify for deduction from employment income, such as subscriptions to professional bodies).63
  • Personal relief (available to resident individuals only).64

 

 

2018
MYR

2019
MYR

Child under 18 years old 2,000 2,000
Child above 18 years old and receiving full time education 2,000 2,000
Child above 18 years old and receiving full time education for the course and university recognized by the Government of Malaysia 8,000 8,000
Relief for disabled child irrespective of age 6,000 6,000

Spouse elects to have their income aggregated with their spouse for assessment purposes65

4,000

4,000

Personal66

9,000

9,000

Further relief for disabled person68

6,000

6,000

Spouse living with or maintained by spouse69

4,000 (if spouse’s income derived from outside Malaysia does not exceed MYR4,000)

4,000 (if spouse’s income derived from outside Malaysia does not exceed MYR4,000)

Further relief for disabled spouse70

3,500

3,500

Life insurance premiums/contributions to approved provident fund or Takaful (maximum)71

6,000 

This relief is now segregated. (RM4,000 is given to contributions to approved provident fund such as EPF. MYR3,000 for payments made to takaful or life insurance premiums.

Private Retirement Scheme/Annuity Premium 3,000

3,000 (effective from YA2012 to 2021)

Educational or medical insurance premiums for the taxpayer, spouse, or child72

3,000

3,000

Supporting equipment for disabled taxpayer, spouse, children, or parent (maximum)73

6,000

6,000

Medical expenses for parents (maximum)74

5,000 [extended to include expenses to care for parents (i.e. treatment and care at home, day/home care centers).

5,000 [extended to include expenses to care for parents (i.e. treatment and care at home, day/home care centers).

Medical expenses for taxpayer, spouse and children on serious diseases (include maximum of MYR500 for medical examination expenses)75

6,000

6,000

Fees for acquiring skills or qualifications at tertiary level or any course of study at post graduate level (maximum

7,000

7,000

Purchase of sports equipment (maximum)77

300

- (Refer to "Lifestyle")

Net amount deposited into Skim Simpanan Pendidikan Nasional for child (maximum)78

6,000

8,000

Parental care

1,500 each

1,500 each

Social Security Organization (SOCSO) Scheme 250 250
Lifestyle (Purchase of reading materials, purchase of sports equipment, purchase of computer, smartphone or tablet and subscription of broadband internet and gymnasium membership fees) (maximum)
2,500 2,500
Breastfeeding equipment (maximum) 1,000 (Applicable to working women with child aged up to 2 years and can be claimed once every 2 years) 1,000 (Applicable to working women with child aged up to 2 years and can be claimed once every 2 years)
Fees paid to childcare centers and kindergartens (maximum) 1,000 (Applicable for individual tax payers who enroll their children up to 6 years of age) 1,000 (Applicable for individual tax payers who enroll their children up to 6 years of age)
  • Cash donations made to the government, a state government, a local authority, or an approved institution or organization or social enterprise. The restriction on deduction of 7 percent of the aggregate income, is applicable to interalier individuals with respect to gift of money made to approved institution or organization or social enterprise and gift of money or cost of contribution in kind for any approved sport activity or Sports Body, approved project of national interest approved by Ministry of Finance.86 However, restriction on deduction of 7 percent does not apply to donations to the government and state government.
  • Cash donations of up to MYR20,000 on the provision of library facilities that are accessible to the public, and to libraries of schools and institutions of higher education.87

The taxpayer is also given the option to elect for joint assessment under the spouse’s name. A tax rebate of MYR400 is available to a taxpayer provided their chargeable income does not exceed MYR35,000. A further rebate of MYR400 is available for the spouse where the taxpayer has been allowed a deduction for spouse relief and their total chargeable income does not exceed MYR35,000.89

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Malaysia? 

The tax reimbursement methods generally used by employers in Malaysia are 1-year rollover methods or current-year grossed up.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in Malaysia? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

As a general rule, all employees whether local or expatriate, are subjected to Pay-As-You-Earn (PAYE). It is mandatory for an employer to deduct tax on a monthly basis from the employee’s remuneration based on the prescribed tables or formula issued by the MIRB. For this purpose, remuneration includes salaries, allowance, arrears, wages, fees, bonus, gratuity, commission, perquisite, tips, benefits-in-kind and value of living accomodation ("VOLA").90 The tax deducted is to cover the tax on the remuneration earned for the month.

Pursuant to the Income Tax (Deduction from Remuneration) (Amendment) (No. 2) Rules 2014, it is mandatory for an employer to allow the employees to claim additional deductions via Form TP1 at a minimum twice a year when determining the amount of monthly tax deductions. 

An employee joining a new employer in the current year is required to complete a prescribed form (Form TP3) to disclose their remuneration from their previous employer(s) to enable the new employer to correctly calculate the monthly tax deductions.

When are estimates/prepayments/withholding of tax due in Malaysia? For example: monthly, annually, both, and so on.

The monthly tax deducted from the remuneration of the employees during a calendar month has to be remitted to the MIRB not later than the 15th day of the following calendar month via the Statement of Tax Deduction by an Employer (Form CP39).92

Relief for foreign taxes

Is there any Relief for Foreign Taxes in Malaysia? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Where there is a double taxation treaty, bilateral credit could be claimed. Bilateral credit shall only be given to a person resident in Malaysia. The bilateral tax credit allowable would be the lower of actual foreign tax payable or the Malaysian tax payable on the foreign income that has been subject to tax twice.93

Where there is no double taxation treaty, unilateral tax credit is allowed but is limited to the lower of one-half of the foreign tax payable on the foreign income for the year or the Malaysian tax payable on the foreign income that has been subject to tax twice.94

Malaysia has concluded double taxation treaties with more than 70 countries/territories, which generally provide for an exemption from Malaysian tax for remuneration for personal services in Malaysia performed for or on behalf of a foreign employer for a period of no more than 183 days during a tax year or a 12 month-period and the remuneration is not directly deductible from the income of a permanent establishment (PE) which the foreign employer has in Malaysia.

General tax credits

What are the general tax credits that may be claimed in Malaysia? Please list below.

The general tax credits available in Malaysia for tax resident individuals are tax rebates and personal reliefs. The tax relief is deductible against the individual’s total income and the tax rebates can be deducted against the individual’s tax liability.

Sample tax calculation

This calculation assumes a married taxpayer resident in Malaysia with two children whose 3-year assignment begins 1 January 2017 and ends 31 December 2019. The taxpayer’s base salary is 100,000 US dollars (USD) and the calculation covers 3 years.

  2017
USD
2018
USD
2019 USD
Salary 100,000 100,000 100,000
Bonus 20,000 20,000 20,000
Cost-of-living allowance 10,000 10,000 10,000
Housing allowance 12,000 12,000 12,000
Company car 6,000 6,000 6,000
Moving expense reimbursement 20,000 0 10,000
Home leave 0 5,000 5,000
Education allowance 3,000 3,000 3,000
Interest income from non-local sources 6,000 6,000 6,000

Exchange rate used for calculation: USD1.00=MYR4.0669(MIRB’s foreign exchange rate for 2018).

Other assumptions

  • All earned income is attributable to local sources.
  • Bonuses are paid at the end of each tax year, and accrue evenly throughout the year.
  • Interest income is not remitted to Malaysia.
  • The company car is used for business and private purposes and originally cost USD45,000 and no fuel is provided.
  • The employee is deemed resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation.
  • Both children are under 18 years old and spouse is not working.
Calculation of taxable income
Year ended 2017
MYR
2018
MYR
2018 MYR
Days in Malaysia during year 365 365 365
Earned income subject to income tax      
Salary 406,690
406,690
406,690
Bonus 81,338
81,338
81,338
Cost-of-living allowance 40,669
40,669
40,669
Housing allowance 48,803
48,803
48,803
Benefit in kind on Company car
7,000 7,000 7,000
Moving expense reimbursement 0 0 0
Home leave 0 20, 335
20, 335
Education allowance 12,201
12,201
12,201
Total earned income 596,701
617,036
617,036
Other income 0 0 0
Total income 596,701
617,036
617,036
Deductions 17,000 17,000 17,000
Total taxable income 579,701
600,036
600,036

Calculation of tax liability

  2017
MYR
2018
MYR
2019 MYR 
Taxable income as above 579,701
600,036
600,036
Malaysian tax thereon 129,575
133,659
133,659
Less:      
Domestic tax rebates (dependent spouse rebate) 0 0 0
Foreign tax credits 0 0 0
Total Malaysian tax 129,575
133,659
133,659

Notes

  • Benefit in kind on company car is calculated based on the prescribed value provided by the MIRB of car cost between MYR150,001 to MYR200,000 where annual value of private usage of car is MYR7,000.(96) 
  • Home leave provided by company consists of fares only. One home leave passage outside Malaysia is tax-free up to a maximum of MYR3,000 per year.

Footnote

1 Section 77(1)(b) of the Act.

2 Section 77(1)(a) of the Act.

3 Section 20 of the Act.

4 Section 103(1) and 103(12)(c) of the Act.

5 Section 103(1) and 103(12)(b) of the Act.

6 Schedule 1 (Section 6) of the Act.

7 Sections 7(1)(a) to 7(1)(d) of the Act.

8 Sections 7(1)(a) to 7(1)(d) and Section 7(1A) of the Act.

9 Section 83(4) of the Act.

10 Section 83(5) of the Act.

11 Sections 7(1)(a) to 7(1)(d) of the Act.

12 Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country/territory for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country/territory employer but the employee's salary and costs are recharged to the host entity, then the host country/territory tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country/territory.

13 For example, an employee can be physically present in the country/territory for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.

14 Section 13 of the Act.

15 Section 13(1)(a) of the Act.

16 Section 13(1)(a) of the Act.

17 Sections 13(1)(c) and 32(2) of the Act, Public Ruling No. 3/2005.

18 Sections 13(1)(c) and 32(2) of the Act, Public Ruling No. 3/2005.

19 Section 13(1)(a) of the Act.

20 Section 13(1)(a) of the Act, Public Ruling No. 2/2013 on Perquisite from Employment.

21 Section 13(1)(b) of the Act, Public Ruling No. 3/2013 on Benefits-in-Kind.

22 Section 13(1)(b) of the Act, Public Ruling No. 3/2013 on Benefits-in-Kind.

23 Section 13(1)(a) and Section 33(1) of the Act.

24 Section 13(1)(a) and Section 38A of the Act.

25 Section 13(1)(a) and Section 33(1) of the Act.

26 Section 13(1)(d) of the Act.

27 Public Ruling No 4/2004 on ESOS.

28 Section 25(1A) of the Act.

29 Section 32(1A)(a) of the Act.

30 Section 32(1A)(b) of the Act.

31 Press statement by the Ministry of Finance.

32 Section 39(1)(m) of the Act; Public Ruling No. 1/2003.

33 Section 13(1)(b)(ii)(A) of the Act.

34 Section 13(1)(b)(i) of the Act, Public Ruling No. 3/2013 on Benefits-in-Kind.

35 Income Tax (Exemption)(No.6) Order 2004.

36 Para 32E, Schedule 6 of the Act.

38 Schedule 6 Para 25(1).

39 Schedule 6 Para 25C.

40 Income Tax (Exemption)(No.8) Order 2011.

41 Income Tax (Exemption)(No.60) Order 2003.

42 Income tax (Exemption)(No.2) Order 2008.

43 Income tax (Exemption)(No.7) Order 2011.

44 Income Tax (Exemption) Order 2008.

45 Section 13(2)(c) of the Act.

46 Section 26 and Section 110 of the Act.

47 Section 12B, Schedule 6 of the Act.

48 Section 52 of the Finance Act 2007.

49 Income Tax (Exemption)(No.12) Order 1985.

50 Para 19, Schedule 6 of the Act.

52 Income Tax (Exemption)(No.7) Order 2008.

53 Part II, Schedule 1 of the Act.

54 Para 33, Schedule 6 of the Act.

55 Part X, Schedule 1 and Section 6(1)(i) of the Act.

56 Part I, II and III, Schedule 5 of the Real Property Gains Tax Act, 1967.

57 Stamp Duty (Exemption)(No.10) Order 2007.

58 Stamp Duty (Remission)(No.3) Order 2012 and Stamp Duty (Remission)(No.4) Order 2012.

59 Section 27 of the Act.

60 Section 32(1A) of the Act.

62 Schedule 2 Para 12 of the Real Property Gain Tax.

63 Section 33(1) of the Act.

64 Section 46 of the Act.

65 Sections 45 and 45A of the Act.

66 Section 46(1)(a) of the Act.

67 Section 46(1)(i) of the Act.

68 Section 46(1)(e) of the Act.

69 Section 47 and Section 45A of the Act.

70 Section 47(1)(b) and Section 45A of the Act.

71 Section 49(1A) of the Act.

72 Section 49(1B)(e) of the Act.

73 Section 46(1)(d) of the Act.

74 Section 46(1)(c) of the Act.

75 Section 46(1)(g) and Section 46(1)(h) of the Act.

76 Section 46(1)(i) of the Act.

77 Section 46(1)(i) of the Act.

78 Section 46(1)(k) of the Act.

79 Income Tax Exemption (No. 14) Order 2013

80 Section 48 of the Act.

81 http://pengiktirafan.jpa.gov.my/.

82 Section 46(1)(f) of the Act.

83 Section 46(B) Income Tax (Amendment) Act 2009 gazetted on 23 April 2009.

84 Section 48(1)(d) of the Act.

85 Section 48(3)(a)(ii) of the Act.

86 Section 44(6) of the Act.

87 Section 44(8) of the Act.

88 Section 44(6) of the Act.

89 Section 6A(2) of the Act.

90 Income Tax (Deduction From Remuneration) (Amendment) Rules 2014.

91 Income tax (Deduction From Remuneration)(Amendment) Rules 2014.

92 Income Tax (Deduction From Remuneration) (Amendment) Rules 2014.

93 Section 132 and Schedule 7 of the Act.

94 Section 133 and Schedule 7 of the Act.

95 Sample calculation generated by KPMG Tax Services Sdn. Bhd., the Malaysian member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on various tax codes quoted within this document.

96 As prescribed by the MIRB, Public Ruling 3/2013 on Benefits-in-Kind.

© 2020 KPMG PLT, a limited liability partnership established under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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