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Malaysia - Residency status - Help!!!!

Discussion in 'Teaching abroad' started by bacapel, Apr 7, 2016.

  1. bacapel

    bacapel New commenter

    Currently working in Malaysia and was lead to believe that resident status (and hence ordinary tax rate of 12%) would be achieved after 182 days working in country (on an emergency tax rate of 28%) with a working visa. 182 days can be achieved during a year year (calender year) or linked if continuous across two tax years provided not broken by more than 14 days outside the country. Most of new staff achieved this by beginning of April and expected to gain resident status and go to the resident tax rate.

    However school says this no longer the case and only runs from beginning of tax year (ie January) and must continue to deduct full emergency tax rate until July and we may well have lost any tax overpaid which we might have been hoping to get back. School says Government has changed expatriate residency rgulations and yet I can find no mention anywhere of this, indeed in January and February multinational corporations were still issuing guides for expatriate workers which had the residency requirements and linking over two tax years as unchanged.

    Can anyone shed any light on the matter? Any help and advice gratefully accepted.
  2. gulfgolf

    gulfgolf Established commenter

    Doesn't match what I've been told.
    Ask the school to supply something in writing. A copy of the law, a link to the government website, something official.
    Go to the tax office and ask. It's time to be filing for 2015 anyway, something you have to do whatever your status.
    Get together with other teachers and hire a tax expert. A tough option, as there are few and they charge silly amounts, and they may not actually be experts, but you could try if the other options don't work.

    If you haven't achieved resident status yet for 2015, and you have to go the linking route, you won't get your money back for quite some time yet. Earliest would be July, technically, though sometimes a sympathetic tax office will make an exception. And the school has to keep deducting 25% until you get the status, so that part is right. But the part about the law changing, doesn't add up to me.
  3. gulfgolf

    gulfgolf Established commenter

    Just noticed. You say people achieved 182 recently. Not possible. If you're linking, you need 182 consecutive days starting in January, so basically January 1 through the end of June, if you don't leave the country at all. Linking is hard and it does require 182 consecutive days in the 2nd year, not spread over two years. Is that what your school is saying? If so, it's not a change, or at least not recent. It's several years old.
    If you've left Malaysia in 2016, you may have indeed broken the link and lost the money. Really depends exactly how long you were gone and more factors. Read the government tax guides carefully. They have tons of example stories to illustrate what you can and can't do.
    Good luck.
  4. musikteech

    musikteech Occasional commenter

    Ah Malaysia. I got stuck in Malaysia quite a few years back with no money and had to keep asking people for 1 or 2 ringgits to get something to eat and drink. I was homeless for about 2 weeks before someone kindly gave me a free room for a few days in Penang until I could contact them godparents and get them to purchase me a ticket back to the UK, which they did :rolleyes:
  5. stupot101

    stupot101 Established commenter

    Some interesting times..
  6. abuameer90

    abuameer90 New commenter

    I have been offered a good job in a KL school and their HR advice was similar to gulfgolf - they've referred me to several (fairly indecipherable) government websites...however, my cash flow is pretty poor and my going ahead with this job is dependent on having enough money to live sensibly...anyone got any other, legible websites with sensible advice?
  7. gulfgolf

    gulfgolf Established commenter

    It's pretty straightforward, if you're talking about your first year in Malaysia. You'll have 25% deducted (check the official govt website in case that percentage is changing for 2016) from your paycheck each month. You'll live on the rest. You will file taxes around April, and officially you'll still be non-resident, so you will get nothing back at that point. But, if you follow the rules and stay in Malaysia sufficiently, including that oh so important 182 consecutive days starting Jan 1 2017, and any time out of the country less than 14 days, then round about July time you can appeal, request retroactive residency for 2016, and get your refund. Exactly how much depends on the exact tax rate for what you earned in 2016. And after that, HR will stop deducting so much from your salary.
    After that, life is easy. Come and go as you please, just make sure to spend at least 182 days per year in Malaysia. Easy enough, since schools tend to have around 180 contact days per year...

    If you want to make it easier, arrive in Malaysia on July 1ish, and get 182 days in 2016. You'll still have 25% taken out each month, but you'll get your refund around April instead of July/August.

    As for whether you can live on 75% of salary, that rather depends on how big the salary is, and what lifestyle you will be supporting.
  8. abuameer90

    abuameer90 New commenter

    Thanks gulfgolf, appreciate the voice of reason!
  9. gulfgolf

    gulfgolf Established commenter

    As background info, local salaries for uni graduates are often in the 2,000 to 3,000 RM range, total monthly package.
    I wouldn't be comfortable living on that personally, but it's possible.
    The smaller international schools have teachers on 3,000 to 6,500 per month. I know some teachers on this salary, and they're doing just fine.
    Again, not my ideal, but Malaysia is cheap.
  10. abuameer90

    abuameer90 New commenter

    I've just been offered a package including overseas allowance and accommodation for MAR 11 800 a month - but I'll be taxed for 28% of that for some time...does that sound like a good salary then?
  11. gulfgolf

    gulfgolf Established commenter

    You haven't mentioned your credentials and experience.
    There are better packages out there, but there are also much lower. What you'd be getting is very livable.

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