Taxation of international executives
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 2 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/jurisdiction 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/jurisdiction refers to the country/jurisdiction to which the employee is assigned. The home country/jurisdiction refers to the country/jurisdiction where the assignee lives when they are not on assignment.
1Section 28, Schedule 6 of the Act.
2Schedule 1 of the Act.
3Section 21, Schedule 6 of the Act.
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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