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An individual, whether tax resident or non-resident in Malaysia, is taxed on any income accruing in or derived from Malaysia.
Personal income tax rates
The following rates are applicable to resident individual taxpayers for year 2018 with a taxable income in Malaysian Ringgit as follows:
* Malaysian ringgit
A non-resident individual is taxed at a flat rate of 28% on total taxable income.
A qualified knowledge worker in a specified area (currently only Iskandar Malaysia) is taxed at the concessionary rate of 15% on chargeable income from employment with a designated company engaged in a qualified activity (e.g. green technology, educational services, healthcare services, creative industries, financial advisory and consulting services, logistics services, tourism). Employment must commence between 24 October 2009 and 31 December 2020.
It was proposed in April 2011 that an approved resident individual under the Returning Expert Program having or exercising employment with a person in Malaysia would also enjoy a tax rate of 15% for five years.
Local income taxes
There are no local taxes on personal income in Malaysia.
The status of individuals as residents or non-residents determines whether or not they can claim personal allowances and enjoy the benefit of graduated tax rates. Resident status is determined by reference to the number of days an individual is present in Malaysia. Generally, an individual who is in Malaysia for a period or periods amounting to 182 days or more in a calendar year will be regarded as a tax resident.