Malaysia Taxation on Rental  Income for Foreigners

There is a lot of confusion on how much tax to pay on rental income by foreigners who owned properties in Malaysia to the Inland Revenue. All rental incomes derived from Malaysia are subject to tax. With this guide on Malaysia taxation rate on rental income for foreigners, we hope you will find this article useful.

While a lot of foreigners find Malaysia properties attractive, it is very important to know the tax rate to avoid any unpleasant moment when the Inland Revenue slam you with a hefty tax bill to pay.

Malaysia Taxation on Rental Income for foreigners – How it works?

Please be informed of Malaysia taxation on rental income for foreigners charged by Malaysia Inland Revenue differs by your status of either resident or non-resident in Malaysia. A resident status is someone stayed in Malaysia for more than 182 days (about 6 months) in a calendar year while a non-resident status did not. This tax rate system applies the same to all including local Malaysians. For example, Malaysians stayed in overseas will be regarded as non-resident status if they stay more than 182 days overseas.

Currently, Malaysia Taxation on rental income under the personal name will be as follows:–

Resident  status for foreigners: 0-28%
Non-resident status for foreigners: flat at 28%

The Malaysia tax rate on rental income for foreigners does not take account of the type of visa pass which you are currently holding. There is no special advantage if you are a holder of Malaysia My Second Home visa compared to the Expatriate Work Visa group.

Example of Malaysia taxation on rental income charged for resident and non-resident status in Malaysia:-

Total rental received during the year 2012: RM 45,000

Less expenses paid during the year:

Property management: RM 9,600
Touch up and handy bills: RM 8,500
Agency fee to get the tenant: RM 3,750

Total bills paid for the year: RM 21,850

Tax chargeable on the rental Income will be:  RM 23,150

For the resident, the tax rate will be:

For the first RM 20,000 – tax to pay is RM 475
For every RM 1 above will be 7% – tax to pay is RM 220
Total to tax to pay: RM 695

For non-resident tax rate chargeable will be:

RM 23,150 x 28% = RM 6,482

We assist all clients in managing their rental and their tax income services for clients who park their rental unit with us. Our service begins with marketing your unit, perform monthly management services including your tax documents with an appointed tax agent. Find out more, how we can assist you!

[Read: Rental Income Tax at www.hasil.gov.my]

For more information on property investment by foreigners, visit www.ExpatriateAdvisory.com. We “simplify your property investment in Malaysia”. Feel free to contact us at +603-2181 2882 or email to contact@expatriateadvisory.com.

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