A foreigner pays Malaysian income tax on income from work done in Malaysia, and the rate depends on how many days you spend here in the calendar year. Stay 182 days or more and you are a tax resident on a 0% to 30% scale with reliefs; stay fewer and you are a non-resident at a flat 30% with none. The pass you hold changes neither.
I’m not a tax adviser, and nothing here replaces LHDN or a registered tax agent looking at your actual paperwork. It’s what checking LHDN’s own pages directly turned up, with every figure checked in November 2026. The house rule for any move: count your days before you count your salary.
TL;DR
- Residence is decided by physical presence under section 7 of the Income Tax Act, not by nationality or visa.
- Residents pay 0% to 30% (YA2025 table below); non-residents pay 30% flat on employment income at every level, a rate that has applied since YA2020.
- Employment in Malaysia of 60 days or less in a year is exempt if you claim it, and foreign-sourced income a resident receives is exempt to 31 December 2036 if it was taxed where it arose.
- Register through e-Daftar on MyTax, then file e-BE or e-B as a resident, or e-M as a non-resident, by 30 April (30 June with business income).
Does a Foreigner Pay Income Tax in Malaysia?
Yes, if the work is done in Malaysia. Under section 4(b) of the Income Tax Act, employment income is derived from Malaysia when the employment is exercised here, paid leave attributable to the work included (LHDN’s Public Ruling 2/2026 sets out both cases). An Employment Pass engineer, a Visitor’s Pass (Temporary Employment) worker and a secondee on a foreign payroll are all inside it. LHDN’s own example is a secondee paid from the United States who spent 92 days here and was taxed on that pay, because the payroll location does not move the work abroad. A remote worker whose foreign employer has no Malaysian presence falls the same way.
A pension or dividend that arises abroad sits under the foreign-sourced income rules further down. For foreign workers on a Malaysian payroll, the employer collects: monthly tax deduction (MTD, called PCB locally) comes off each payslip, at 30% for a non-resident.
Are You a Tax Resident? The 182-Day Rule and the Three Others
Section 7 gives four routes to residence, and meeting any one makes you a resident for that year. The first is the one most people mean: 182 days or more present in the calendar year, in one stretch or several. The second covers a shorter year that links to a run of 182 consecutive days in the year before or after; absences for work, illness or social visits still count as presence, with the social visits capped at 14 days in total. The third needs 90 days or more this year, and in each of any three of the previous four years you were either a Malaysian tax resident or here 90 days or more. The fourth makes you resident this year if you are resident next year and were in the three before. LHDN’s residence page carries the exact wording.
The arrival date does the damage. Arrive on 1 September 2025 and you have 122 days by 31 December, so 2025 is a non-resident year at 30%. If you stay, 2026 makes you resident, and once 2026 reaches 182 consecutive days the linked-period test can rescue 2025, so the 2025 return can be amended. Arrive on 1 March 2026 and you reach day 182 on 29 August, so 2026 is a resident year from the start of your return.
That is the downside, and it stands: a foreigner who lands after early July pays 30% on everything earned that year, with no reliefs, and gets the difference back only by filing and waiting. The 30% deducted before you reach 182 days comes back through that year’s return, filed as a resident, with your bank details on MyTax. Foreign employees describe the wait as weeks to several months, and a refund claimed at a counter can start with a review before the payout.
The first-year cash-flow hit of a late arrival is worked through in a guide to timing a move around the 182-day line.
Income Tax Rates for Foreigners in Malaysia (YA2025, With the 2027 Changes)
Residents climb bands from 0% to 30%; non-residents pay one. The table shows the YA2025 resident rates from LHDN’s individual tax rate page, the changes proposed for YA2027, and the non-resident rate.
| Chargeable income (RM) | Resident, YA2025 | Resident, from YA2027 (proposed) | Non-resident |
|---|---|---|---|
| 0 to 5,000 | 0% | 0% | 30% |
| 5,001 to 20,000 | 1% | 1% | 30% |
| 20,001 to 35,000 | 3% | 3% | 30% |
| 35,001 to 50,000 | 6% | 6% | 30% |
| 50,001 to 70,000 | 11% | 11% | 30% |
| 70,001 to 100,000 | 19% | 18% | 30% |
| 100,001 to 150,000 | 25% | 24% | 30% |
| 150,001 to 400,000 | 25% | 25% | 30% |
| 400,001 to 600,000 | 26% | 26% | 30% |
| 600,001 to 1,000,000 | 28% | 28% | 30% |
| 1,000,001 to 2,000,000 | 28% | 30% | 30% |
| Above 2,000,000 | 30% | 30% | 30% |
Chargeable income is gross pay minus reliefs, and non-residents get no reliefs, so the same salary lands in different places. LHDN’s table gives cumulative tax of RM3,700 at RM70,000 and RM9,400 at RM100,000, which keeps the arithmetic short. A resident on RM81,000 gross has RM72,000 chargeable after the RM9,000 self relief and pays RM4,080; a non-resident on the same RM81,000 pays RM24,300. At RM159,000 gross the resident has RM150,000 chargeable and pays RM21,900 against a non-resident’s RM47,700. The proposed YA2027 bands would make that resident RM21,100, before the bigger relief.
Reliefs are what the 182 days buy: RM9,000 self relief (proposed RM12,000 from YA2027), plus EPF and SOCSO contributions, insurance premiums and children. What comes out of a payslip for EPF and SOCSO decides how much of that you can claim.
The YA2025 bands also apply to YA2026, filed in 2027. The right-hand column is Budget 2027 proposals from 9 October 2026, and it applies from YA2027 only if the Finance Act passes them.
Payments to non-residents carry their own withholding rates (interest 15%, royalties 10%, public entertainers 15%), but those bite payers and contractors, not a salary.
What Is the 60-Day Exemption for Short Assignments?
The exemption applies when employment in Malaysia lasts 60 days or less in the year, or one continuous period of 60 days or less that straddles two years (Schedule 6, paragraph 21). It counts employment period, not days present: 61 days is taxed in full, and so is a split of 29 plus 45 days across two jobs in the same year. You claim it in the return, and a double tax agreement’s 183-day article can go further for secondees from treaty countries.
Is Foreign Income Taxed in Malaysia?
For a resident individual, foreign-sourced income received in Malaysia is exempt from 1 January 2022 to 31 December 2036 (P.U.(A) 234/2022, extended by P.U.(A) 451/2024, gazetted 24 December 2024), on one condition: the income was taxed in the country where it arose. Partnership income is excluded. The exemption has a printed expiry date, so a long stay needs a plan for 2037. A non-resident is outside Malaysian tax on foreign income to begin with, and LHDN’s guidelines on income received from abroad cover the conditions.
The point most remote workers miss is where the work happens, not where the employer sits. Salary for work you do while sitting in Kuching for a foreign client is Malaysian-sourced, not foreign-sourced, so the exemption does not reach it, and “already taxed abroad” is a condition most remote workers cannot meet anyway. The exemption reaches a UK pension or US dividends that were taxed at source. Remote working from Kuching on a DE Rantau pass covers the visa side.
What Do DE Rantau, MM2H and Remote Workers Pay?
DE Rantau holders face a table that LHDN supplied to MDEC, set out in the pass’s FAQ, version 11. A foreign freelancer paid from abroad is taxed under section 4(a) subject to the residence test. A freelancer’s Malaysian-source fees carry 10% withholding under section 109B for the first 182 days of stay, credited under section 110 on the return. A foreign remote employee is exempt if present 60 days or less, and taxable from day 61 at the rate their residence status gives. The pass itself needs an LHDN e-registration slip at endorsement and proof of settled tax at renewal.
MM2H and S-MM2H holders cannot work, so they usually have no Malaysian income. Their pension is covered by the 2036 exemption if it was taxed at home. A holder who passes 182 days is a Malaysian resident and can apply for a Certificate of Residence through e-Residence on MyTax to claim treaty relief at home. The visa rules are on the official MM2H programme page, and what MM2H and S-MM2H actually require covers the rest.
Who Actually Gets the 15% Rates?
None of the 15% concessions fits an expat employee in Kuching. The Returning Expert Programme is 15% flat on employment income for five years, but only for Malaysian citizens working abroad (PR 1/2026, applications to 31 December 2027). The Iskandar knowledge-worker window closed on 31 December 2015. The scheme running now is the Johor-Singapore SEZ, 15% for ten years for eligible knowledge workers in qualifying sectors. Nothing of the kind exists in Sarawak.
How Do You Register and File Income Tax as a Foreigner?
- Get a tax number. Register through e-Daftar on MyTax; since 1 January 2024 that is the only route for individuals. A non-citizen registers as file type IG with a copy of a valid passport, or in the MyTax mobile app through e-Daftar with e-KYC from 3 November 2025 (non-citizens aged 18 or over with an NFC-chip passport, per Navigasi HASiL 2026). LHDN’s registration page lists the other accepted documents.
- Activate your first login. The first MyTax login needs a PIN or digital certificate through e-CP55D or e-KYC; applicants report the activation taking a few working days to about two weeks, and a passport holder can still end up at the Kuching office (Menara Hasil, Aras 17, No.1 Jalan Padungan).
- Pick the right form. e-BE for a resident with no business income, e-M for a non-resident, both due 30 April. With business income it is e-B or e-M by 30 June; what a foreign-owned company changes for the owner’s tax is its own question. LHDN’s e-filing grace ran to 15 May and 15 July in 2026.
- Put your bank account on MyTax. A refund goes nowhere without it, and opening a bank account as a foreigner is a prerequisite for most people.
- Ask for tax clearance when you leave. The steps for departing employees are in tax clearance before leaving Malaysia.
Do Double Tax Agreements Help a Foreign Employee?
A double tax agreement stops the same salary being taxed twice, and for an employee the clause that matters is the 183-day dependent-services article. Malaysia has comprehensive agreements with the UK, Australia, Singapore, China, India, Indonesia, the Philippines, Germany, France, Japan, South Korea, Canada and New Zealand. It has none with the United States, so a US secondee is taxed under Malaysian law alone (PR 2/2026 Example 15). Relief comes as bilateral credit under section 132 where an agreement exists and unilateral credit under section 133 where it does not. LHDN’s double tax agreement page holds the full list.
So What Does a Foreigner in Kuching Actually Pay?
A foreign worker, an Employment Pass holder and a remote worker in Kuching are all taxed on the work done here. Tax is deducted at 30% until the year reaches 182 days, and the year’s return then settles a resident on the 0% to 30% scale. A retiree on MM2H who lives off a pension taxed at home usually has little Malaysian tax to pay. No Sarawak concession lowers anyone’s rate.
What a foreigner can control is the calendar: a 1 March landing and a 1 September landing sit on opposite sides of the 182-day line, and the second files its first year at 30%. Count your days before you count your salary.
What Is the Tax Rate for Foreigners in Malaysia?
30% flat under 182 days in a calendar year, and 0% to 30% with reliefs at 182 or more.
How Many Days to Be a Tax Resident in Malaysia?
182 in the calendar year, or fewer if the year links to 182 consecutive days either side.
Do Foreign Workers Pay Income Tax in Malaysia?
Yes, through monthly tax deduction on the payslip, at 30% while non-resident. Once resident, tax falls sharply: on the RM1,700 monthly minimum wage, chargeable income after the RM9,000 self relief is RM11,400 and the table gives about RM64 a year before any rebate. What the minimum wage actually is sets the threshold.
Leaving Malaysia? Tax clearance for people who are leaving covers what the employer files and when.