Taxation of international executives
Are there social security/social insurance taxes in Malaysia? If so, what are the rates for employers and employees?
The Social Security Organization (SOCSO) is a scheme to provide certain benefits to the employees in cases of employment injury including occupational diseases and invalidity and for certain other matters in relation to the employment. Contributions are capped at the monthly wage of MYR4,000. All Malaysian employees and permanent residents are to contribute irrespective of their amount of wages.. The current rates of contribution vary from MYR0.10 to MYR19.75 for the employee and from MYR0.40 to MYR69.05 for the employer.
In addition, employers who hire foreign workers (excluding domestic servants) with valid documents, shall register their employees with SOCSO and contribute to the Employment Injury Scheme only. The rate of contribution is 1.25 percent of the employees’ monthly wages (capped at MYR49.40) and to be paid by the employer only, i.e. employees are not required to contribute.
EPF is a national social security organization operating through a provident fund scheme in Malaysia. Its primary aim is to provide retirement benefits to Malaysian employees through the management of their savings in an efficient and reliable manner.
Malaysian employees and permanent residents are required to be contributors to the EPF. The employee and employer’s contribution are at the rate of 11 percent and 12 percent of the employee’s wages. Non-Malaysian employees have the option of becoming members. The minimum statutory contribution by the expatriate employee and the employer will be 11 percent and MYR5 of the expatriate employee’s wages.
For employees earning a monthly wage not exceeding MYR5,000, the employers’ statutory contribution rate is 13 percent.
Are there any gift, wealth, estate, and/or inheritance taxes in Malaysia?
No, other than real property gains tax on gains arising from disposal of real property or shares in a real property company.
Are there sales and/or value-added taxes in Malaysia?
The Sales and Services Tax (“SST”) is imposed in Malaysia.
Are there unemployment taxes in Malaysia?
Employment Insurance System (EIS)
EIS is a financial scheme in helping employees who have lost their jobs and it is managed by SOCSO The EIS has two components which includes financial assistance and employment services. Besides enabling laid-off employees to claim a percentage of the insured salary for a period of between three and 6 months, the training programs and other components assist the laid-off employees to obtain suitable jobs and return to work as soon as possible.
Malaysian employees and permanent residents in the private sector aged between 18 years to 60 years old must contribute to this scheme, unless they are aged 57 years and above and no contributions have been paid before reaching 57 years.
Employees need to make a 0.2 percent contribution of their salary to EIS. On top of 0.2 percent contribution from employees, employers must also make another 0.2 percent contribution for each of their employees. The contributions are capped at MYR7.90 each per month.
Are there additional taxes in Malaysia that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.
Not applicable for assignee.
In general, stamp duty is payable on instruments executed in Malaysia.
Foreigners can only buy properties in which the value is MYR1,000,000 and above (MYR600,000 above for year 2020 only). There is no stamp duty exemption on the sale and purchase agreement and loan agreement.
Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?
Pursuant to Income Tax (Automatic Exchange of Financial Account Information) (Amendment) Rules 2017, Malaysia has committed to exchange information with respect to different types of accounts opened and maintained by financial institutions in Malaysia. The financial institutions are required to furnish information to the tax authorities. As such, individual taxpayers should be aware that the tax authorities will receive financial information relating to bank accounts maintained overseas.
1 Employees Social Security Act, 1969.
2 Employees Provident Fund Act, 1991.
3 Stamp Act, 1949.
All information contained in this publication is summarized by KPMG Tax Services Sdn Bhd., the Malaysian member firm member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Malaysian Income Tax Act, 1967 (the Act); Section 28, Schedule 6 of the Act., Schedule 1 of the Act, Section 21, Schedule 6 of the Act., Schedule 1 (Section 6) of the Act., Sections 7(1)(a) to 7(1)(d), Sections 13 of the Act., Employees Social Security Act, 1969. 2 Employees Provident Fund Act, 1991, and the Stamp Act, 1949.
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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.