Foreigners working or investing in Malaysia face different tax treatment depending on their residency status. Non-residents pay a flat 30% with no reliefs. Tax residents (183+ days) pay progressive rates with full reliefs โ potentially much less. Here is the complete guide for expatriates.
Foreigner Tax Residency and Rates
| Residency Status | Days in Malaysia | Tax Rate | Personal Reliefs? |
|---|---|---|---|
| Tax Resident | 183+ days in YA | 0%โ30% progressive | Yes, same as citizens |
| Non-Resident | Under 183 days | 30% flat on all income | No |
| Returning Expert (REP) | Qualified programme | 15% flat for 10 years | No |
| Principal Hub incentive | Approved company | Reduced rates apply | Special rules |
MM2H (Malaysia My Second Home) Tax Status
MM2H holders living in Malaysia for 183+ days are tax residents subject to Malaysian income tax on Malaysian-sourced income. Foreign-sourced income remitted to Malaysia (post-2024 rule) is also potentially taxable. MM2H holders with investment income should obtain tailored tax advice.
Double Taxation Agreements
Malaysia has DTAs with 73 countries. DTAs generally: prevent the same income being taxed in both countries, reduce withholding tax on dividends/interest/royalties, and determine which country has primary taxing rights. Check the specific DTA with your home country for applicable provisions.
Expatriate Tax Filing Obligations
Tax resident expatriates file Form BE (employment income) or Form B (other income) by April 30 / June 30 respectively. Non-residents on short-term assignments may have tax cleared by employer via Form M (leavers). Both forms are filed via LHDN's MyTax portal.
Our editorial team specialises in Malaysian personal finance โ covering loans, taxation, insurance, EPF, and Islamic finance. Every article is fact-checked against Bank Negara Malaysia (BNM), LHDN, and major Malaysian bank publications. We reference our calculators (which use industry-standard formulas) to ensure consistency between our written content and tools. Learn more about our methodology โ