Malaysia Taxation on Rental Income for Foreigners – How it works?
Please be informed that the Malaysia taxation on rental income for foreigners charged by Malaysia Inland Revenue differs by your status you have 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 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 in overseas.
Currently, Malaysia Taxation on rental income under the personal name will be as follows:
Resident status for foreigners : 0- 25%
Non-resident status for foreigners : flat at 25%
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’s taxation on rental income charged for a resident and non-resident status in Malaysia:-
Total rental received during year 2012 : MYR 45,000
Less expenses paid during the year:
Property management : MYR 9,600
Touch up and handy bills : MYR 8,500
Agency fee to get the tenant : MYR 3,750
Total bills paid for the year : MYR 21,850
Tax chargeable on the rental Income will be: MYR 23,150
For resident, the tax rate will be :
For the first MYR 20,000 – tax to pay is MYR475
For every MYR 1 above will be 7% – tax to pay is MYR220.50
Total to tax to pay : MYR 695.50
For non-resident tax rate chargeable will be :
MYR 23,150 x 26% = MYR 6,019
Under Company name, the tax will be as follows:
Net profit below MYR 500,000 – 20%
Every additional MYR1 above MYR 500,000 net profit – 25%
Cost to maintain your property includes:
- Monthly service charged by the property management. The minimum cost would be your monthly service fee charged by the property management would include security, maintenance of all facilities, compounds and cleanliness of common areas.
- The quit rent payable twice a year to Local Town Council
- The assessment payable once a year to Land Office