Local year-end settlement

1. Year-end settlement and report

In Malaysia, individuals are subject to personal income tax, real estate capital gains tax, land and ownership tax, and stamp duty.

In Malaysia, the tax rate is differentially applied depending on whether or not you are a tax resident, and is determined by the length of stay in accordance with Section 7 of the Income Tax Act of 1967. In general, if you stay for more than 182 days within a calendar year, you are considered a tax resident. In other words, if you are considered a resident from the first day of the new year, you are actually staying in Malaysia and staying in Malaysia for more than 182 days per year in the previous year. Individuals who do not meet the residency requirements are non-resident and a fixed tax rate is applied.

In general, income tax is withheld from salary and final settlement is made by filing an income tax return after the end of the tax year. If you are a tax resident, you will be taxed differently according to your income level.

An individual's tax year follows a calendar year, and taxation on earned income must be withheld by the employer from the salary and paid to the tax authorities. Malaysia has introduced a voluntary reporting system. Individuals' earned income or business income must be reported for income tax, and if there is any tax owed after year-end settlement, payment must be made by April 30th and June 30th of the following year.
For year-end settlement, data entry and tax inquiries can be made through the Malaysian Tax Office.