Malaysia: Living There - Tax Issues
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Living There
INDIVIDUAL TAXATION
Resident individuals are taxed on their Malaysian-sourced income. Married couples may file for joint assessment, but separate assessment is deemed to be more effective in lowering over-all tax liability.
Foreign individuals who decide to become permanent residents of Malaysia will be permitted to purchase residential property only under certain conditions. The Foreign Investment Committee (FIC) provides the following guidelines:
- Each residential unit must be valued over RM60,000 (US$18,551)
- Your husband/wife must be a Malaysian citizen
- OR you must be qualified to apply for citizenship and submit the necessary applications
INCOME TAX
Malaysian residents are taxed at the following progressive rates:
INCOME TAX RATES |
|
| TAXABLE INCOME, RM (US$) | MARGINAL TAX RATE |
| Up to 2,500 (US$773) | nil |
| 2,500 - 5,000 (US$1,546) | 1% on band over US$773 |
| 5,000 - 20,000 (US$6,184) | 3% on band over US$1,546 |
| 20,000 - 35,000 (US$10,822) | 7% on band over US$6,184 |
| 35,000 - 50,000 (US$15,459) | 13% on band over US$10,822 |
| 50,000 - 70,000 (US$21,643) | 19% on band over US$15,459 |
| 70,000 - 100,000 (US$30,919) | 24% on band over US$21,643 |
| 100,000 - 250,000 (US$77,297) | 27% on band over US$30,919 |
| Over 250,000 (US$77,297) | 28% on all income over US$77,297 |
| Source: Global Property Guide | |
The following personal reliefs are granted to reduce tax liability:
PERSONAL RELIEFS |
|
| Types of Relief | RM (US$) |
| Self | 8,000 (US$2,474) |
| Additional relief for disabled individual | 6,000 (US$1,855) |
| Spouse | 3,000 (US$928) |
| Additional relief for disabled spouse | 3,500 (US$1,082) |
| Child - per child below 18 years old - per child over 18 years old, unmarried and receiving higher education |
1,000 (US$309) 4,000 (US$1,237) |
| Disabled child | 5,000 (US$1,546) |
| Additional relief for disabled child over 18 | 4,000 (US$1,237) |
| Life insurance premiums | 6,000 (US$1,855) max |
| Medical expenses for parents | 5,000 (US$1,546) max |
| Medical expenses for self, spouse or child | 5,000 (US$1,546) max |
| Purchase of supporting equipment for disabled spouse, children, parent, or self | 5,000 (US$1,546) max |
| Fees expended on approved courses | 5,000 (US$1,546) max |
| Cost of purchasing books, journals or other similar publications for enhancing knowledge | 700 (US$216) max |
If the resident individual’s chargeable (taxable) income is less than RM35,000 (US$10,822), additional rebates of RM350 (US$108) can each be claimed by the taxpayer and his spouse. These additional rebates apply for married couples, whether the couple is opting for either joint or separate assessment.
A taxpayer or his spouse can claim a rebate of RM500 (US$155) for the purchase of a personal computer once every five years. The tax rebate is deducted from the tax payable for individuals earning less than RM3,500 (US$1,082).
CAPITAL GAINS TAX
As of 01 April 2007, there is no tax on capital gains.
Before April 2007, disposals of real property by residents are subject to capital gains tax at the following rates:
| HOLDING PERIOD | TAX RATE |
| Up to 2 years | 30% |
| 2 years – 3 years | 20% |
| 3 years – 4 years | 15% |
| 4 years – 5 years | 5% |
| Over 5 years | nil |
Citizens and permanent residents are entitled to an exemption of RM5,000 (US$1,546) or 10% of the gain, whichever is higher.
PROPERTY TAX
Assessment Tax on Residential Property
The assessment tax is a local tax based on the annual rental value of the property, as assessed by the local authorities. It is generally levied at a flat rate of 6% for residential properties and payable in two installments.
Quit Rent
The quit rent is a local tax levied on all landed properties, payable annually at a rate of 1 sen (US$0.003) to 2 sen (US$0.006) per square foot, wherein RM1 is equal to 100 sen (cents). The quit rent liability is generally estimated to be less than RM100 (US$31) per year.
Malaysia - more data and information
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Your Comments
posted by jenko | 2007-07-30
engineer, singapore
Hi, i am a bit confused on this RPGT.Hope u can clear up my doubts.is the RPGT waiver meant for foreigners means non-citizens who are residents /PR only? or does it include foreigners living overseas? 1. I am a malaysian living overseas . . recently i inherited a RM30k government flat and a rm250k shoplot from my dad. i am giving up my citizenship . 1. will i have to sell off my governemnt flat? 2. will there e RPGT since i am not a citizen or residence.
posted by A.A.Rezvani | 2008-02-07
Dear Sirs,Please inform us if we buy a apartment or bungalow just for our living in Malaysia,do we have to pay tax?We are awaiting for your reply.Best regards,A.A.Rezvani