There should be more people like you in this world. Clear, concise and straightforward advice. Keep up the great work 😊 I am a UK citizen but a UK non-resident and looking to live out here (SE Asia) permanently. I have an Amazon FBA store (sole trader) within the UK and the EU selling physical products. Would you still need to pay income tax in the UK or EU? I presume that forming a LTD company you will have to pay income, CT etc as this meets different requirements. I understand that when the VAT threshold is reached within a certain country you must register and pay VAT too.
Thank you very much for the amazing comments, it's hugely appreciated! Yeah I work with a lot of UK Amazon FBA traders - as a non-UK resident you won't have any UK income tax to worry about so long as you don't have a UK Ltd company. Similarly you'll have no EU based income tax liabilities if you're not tax resident in any EU country. If you did want a company it would be worth considering a US LLC or a UK LLP (these are both pass-through vehicles and don't pay corporate tax). And yes, VAT is different and generally is unchanged regardless of whether you're a company / sole trader - as you said it depends on whether you have reached a certain threshold for customers in a certain location (e.g £85k in the UK, EUR 75k in Ireland (products), EUR 22k in Germany etc)
Amazing video mate! I was curious to hear your thoughts about being a content creator with a business in the US living in Malaysia on a nomad visa. If the creator is already paying and filing taxes in the US. Would they be subject to pay taxes here too?
Hi Mike, thanks for the kind words! Content creation is definitely an interesting one as it can highly depend on your specific set up. For example, if the content business is located in the US, there's a LLC in place, and perhaps even some physical presence in the US (office, studio, equipment, stock etc), and maybe even the intellectual property (such as your brand, domain name, website etc) is registered in the US - then there's a strong case that the income is US sourced and not taxable in Malaysia. For content creators living in Malaysia full time & making content in Malaysia, they don't have any other countries in the chain, no foreign companies etc and they clearly do all the 'profit generating' activities in Malaysia, then it's going to be considered Malaysian sourced income therefore taxable in Malaysia. As an Amercian, you would claim a 'foreign tax credit' (basically any Malay taxes you pay would be deducted against your US tax bill) on your US tax return to avoid double taxation.
This is super interesting thank you so much for taking the time to explain complicated systems so clearly and eloquently. So if I am a freelancer working with a UK based company as a contractor with them, so not an employee, and I write articles for their website, it sounds like that would be considered Malaysian sourced income, correct?
Hi Andy, this is great. crisp, clear, concise, and to the point! question, I been staying in Malaysia for a year now, on a DE Rantau Nomad pass. my work is based out of Singapore, but since I work from home, I reside mostly in Malaysia. Any suggestions on how to go about taxation? i am already paying tax in Singapore (there is DTA with Malaysia as well).
Hi, thanks for the kind words - up until 2027 (for now, they may extend this) there's an exemption for foreign sourced income (which includes Singapore) which has been subject to tax of a 'similar nature' as Malaysian income tax (which Singaporean income tax qualifies as) in the country of origin. Interestingly & confusingly, the Malaysian take on this with regards to source/origin appears to be different to how they normally treat 'source' - so even if the work is done in Malaysia, the country of origin is deemed to be SG if the company is in SG and the money comes from a SG bank account. So ultimately if your tax is already being paid there, then this exemption can cover your obligations.
Very informative! Now, let’s say John is a shareholder and director of a UK-registered limited company that also has other shareholders and directors located elsewhere. John doesn’t sign any contracts on behalf of the company (other directors do), but he does some director work for the company while living in Malaysia for which he receives a director salary. On top of that he also receives dividends as he’s one of the company shareholders. According to your video his director salary would be taxed in Malaysia, but not the dividends which are considered passive income, am I correct?
Hi, yes this would be correct so long as there's a justification that the dividends are truly non-Malaysian sourced in nature (i.e that the profits made to pay out those dividends are sourced elsewhere). There are new rules about foreign dividends needing to have 'economic substance' in the foreign jurisdiction in order to qualify for the tax exemption - economic substance broadly meaning does the company actually exist & perform activities outside of Malaysia, or is it just incorporated outside of Malaysia to obtain a tax benefit (and mostly run in Malaysia). On the basis that other people are working on the company outside of Malaysia then the substance requirement would be met. Dividends also need to be sourced from a country which has a headline tax rate of 15% of more (which the UK does via its corporate tax rate of 19-25%). So as a rule of thumb, dividends from a tax haven could be more contentious. But they haven't clarified this yet - many Malaysian residents have dividends coming from Dubai, and they have had mixed messages on whether these will qualify yet, so this is definitely an evolving issue
@@WorldTaxAndyI'm an Indian citizen living in India. If I invest in a condo in Kuala Lumpur to generate rental income, how much % income tax would I have to pay in Malaysia? And will I be double taxed in India?
Great video! I still have some questions 😀. I intend to work remotely (for a UK company) in Malaysia as a Nomad Digital, I believe I am classed as a Malaysian Tax Resident (will be here for > 182 years) and my income is from my UK employment but work is performed in Malaysia. So I guess I will pay tax in Malaysia but how do I stop paying UK tax on my salary - this is currently being taxed at source via PAYE. Thanks in advance.
Hi Andy, thank you for that advice. I have a query, say you are deemed a tax resident in Malaysia due to spending more than 6 months in Malaysia but income is sourced from a UK employer, but you work remotely in Malaysia. You do not work from an office but rather your home in Malaysia and do not conclude contracts, you are simply an accessory to the core business which is in the UK i.e. Complaint Admin. Double taxation policy: "Notwithstanding the preceding provisions of this article, the term ‘permanent establishment’ shall be deemed not to include: (e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character". Wouldn't the role of Complaint Admin come under preparatory or auxiliary character? i would be very grateful for your advice?
Very insightful video! Thanks for sharing this Andy. Quick question: If a freelance consultant who works remotely in Malaysia (for less than 183 days) and received fees from foreign clients outside of Malaysia, do they need to file taxes in Malaysia if they've already paid tax to their origin country of citizenship?
Hi Zenas thanks for the kind words - generally if you don't spend 183 days in Malaysia AND have paid tax at source on your income, then you won't need to file taxes in Malaysia. There are some nuances to this but if your origin country has a headline tax rate of 15% or more (essentially, if it isn't a tax haven) then this is almost always exempt from tax in Malaysia.
Great video Andy. This is very helpful. Was wondering if you have a view on how active day traders are taxed in Malaysia, if one trades US futures whilst living in Malaysia. Trading could be either through a US/London based prop firm, and/or on one's own account using a US based broker. All profits are retained in a Singapore bank account. My understanding is that income from active trading on overseas exchanges is regarded as foreign source income in Malaysia, if not remitted to Malaysia, and would not be taxable in Malaysia, even if the trader was Malaysian tax resident. Is that correct? Or if not, have you seen a tax efficient solution for this situation? Many thanks indeed
Thanks for the comment and great question. This is definitely a bit of a grey area - for traders in general you first off try to establish whether your trading is 'capital' or 'income' in nature. Because if its capital, then there's no concerns as Malaysia does not tax capital gains. But it does tax income items. The general characteristics Malaysia believes determines that trading activity is income rather than capital are: - Large number of trades (thousands per year) - Short period of ownership (frequently holding onto assets for a few days or weeks) - Using high-frequency exchanges - Work done (by you) to increase the marketability of the traded asset - Not offered for sale in a forced manner (e.g., the sudden need of cash; foreclosure) - The motive is business related rather than investment (this can be subjective & hard to argue) - Obtaining short-term financing to trade Now assuming you will tick the box of your trades being income in nature (highly likely as a futures trader you will meet this), the next step is whether the income is foreign sourced or not. If it is foreign sourced, then it will be exempt if not remitted into Malaysia (e.g Singapore instead). This is the part which is grey. The arguments I have seen used by tax lawyers in the past to support the foreign sourced nature (therefore non-taxability of this type of activity) is that the underlying activities of the traded assets (lets say they're futures on US equities) are occurring outside of Malaysia. Furthermore the hosting platform (e.g the US based broker) is in the US. There is no case law I'm aware of that suggests Malaysia disagrees with this assessment. To just be careful - what I would say is that if the assets were in Malaysia, or via a Malaysian brokerage, then I think there's no real dispute, it would be taxable. On a similar note, the Malaysian authority also deems a lot of crypto trading taxable when it's not done via a foreign broker (lets say its via a Decentralised Exchange) because the trader himself is holding the assets in Malaysia, and using his skills to generate profits in Malaysia. But note this is likely an evolving area, it's not one Malaysia has paid much attention to in the past. So for now I think the general consensus I've seen recommended by lawyers (i.e that in your specific situation it wouldn't be taxable if not remitted) is likely sound. But it's definitely one worth keeping an eye on. Also note that all of Malaysia's non-remitted income exemption is scheduled to change in 2027 (i.e the fact the income is held abroad will no longer provide tax protection) so worth being aware of for planning purposes
@@WorldTaxAndy Thank you Andy, this is a very helpful perspective. I love your clarity of thought (which is often surprisingly lacking in the Tax advisory space!). Much appreciated. Will surely connect with you nearer the time once I'm ready to move forward. I hope to be in KL within the next few months, and take it from there. Do you also help with Immigration/Visas for Malaysia? I'm a British citizen. I'd ideally want to get the MM2H (waiting for the new rules), or failing which, the De Rantau. Not that keen on the Labuan Director Visa. Cheers
@@FrozenSkyy Thanks for the kind words, hugely appreciated! I'm not a visa expert so I don't specifically help with getting these set up but I've seen a lot of clients over the years go through the processes so always happy to provide insights in what I do know. The MM2H could be interesting again (it's definitely fallen off in the past year or so). The Labuan Director Visa seems to often be fraught with complications, rule changes etc so I'd agree with avoiding this if possible
Super Informative and Unique video in entire youtube ! My question is : How about if Lived in Malaysia for 1 year on Digital Nomad Visa with a W2 Job from our own US LLC as Software Engineer , can we file US Income Tax ( With US FEIE at around 0% Tax bracket ) but how do we prove to Malaysia that we filed US Taxes so no need to pay any tax to Malaysia ..?
Thanks for the kind words - yes as an American you should be filing for US income taxes and definitely claiming the FEIE if you meet the requirements (which it sounds like you do given 1 year spent in Malaysia. The US situation from a Malaysian perspective is slightly complex though because Malaysia and the US do not have a double taxation treaty. However, in general Malaysia seems to be accepting of foreign income as non taxable if you can prove it was subject to tax in a country with a tax rate above 15%. This would include the US. This doesn't mean you need to have paid this amount of tax, it's just that it needs to have been declared in a country with a tax rate above 15% on a tax return. Your proof therefore can be the filed US 1040 form. Note: this is an evolving area and we definitely need some further guidance from Malaysia on this because these rules are fairly new and we don't have any case law yet.
@@10X_Brain_Time I’m specialised in international tax & have been for 10 years. But specifically my focus is mostly on Malaysia, Singapore, US, UK. This is where I’ve lived & worked over the years and these are the tax systems I’m most familiar with. I also run a tax consulting firm and we employ over 30 local tax lawyers & accountants including specialists in Malaysia among others. So my own knowledge & experience plus those of my colleagues/business partners allows me to advise in these areas
Loved the video Andy, thanks for sharing and super helpful. I was wondering, if I am working remotely from Malaysia under the De Rantau pass for more than 6 months for an Australian company, earning in AUD, and the Australian tax office is withholding my taxes, is it ok to just go ahead and do my tax return in Australia? I know the countries have a double-tax treaty but unsure how it works. Is there a need to inform the Malaysian tax office? or is there no need to do anything? I know that De Rantau is asking for tax receipt for De Rantau pass renewals.
Hi, thanks for the kind words. Yes so this is a common scenario for Australians in Malaysia and generally the double tax treaty will protect you from being taxed again in Malaysia if you have a reasonable claim that you're an Australian resident (this doesn't mean spending X number of days in Australia, it could be that you simply have ties such as a home available, assets family, intent to return one day etc). On this basis you can generally claim to be an Australian tax resident, meaning nothing changes when living in Malaysia. The renewals process does accept foreign tax returns - I've seen people with Australian, Canadian and UK tax returns accepted when they go to renew their pass so this shouldn't be an issue if you have evidence of taxes paid in Australia
@@WorldTaxAndy thanks Andy, do you provide services in helping us file these taxes in Malaysia as a digital nomad? do you work with a partner (or have a recommendation) that's quite reasonable in price?
@@fitzeralifestyle5293 No problem. Whilst I don't currently work with an official partner, from all the clients I do work with in Malaysia I've frequently heard good things about YAU & CO (yauco.com.my/) and MEGAT & CO (www.megatco.com/) but its always worth shopping around as at certain times of year you'll find some of them are willing to offer deals on tax return filings
What if you own an e-commerce business, the place of transaction is online in US, so will it be taxable? Thanks for this, bc I heard from nomad capitalist that it’s tax free if foreign income is not remitted in Malaysia but he didn’t mention about how certain online businesses would be considered as taxable work.
Hi, e-com businesses are very much case by case and there's no black & white rule because tax laws just haven't caught up with the modern business world. However its primarily about where the value is being generated. For example, if you're the sole owner, working on the business in Malaysia & living full time in Malaysia - Malaysia could argue this constitutes Malaysian sourced income due to you being the sole value creator, regardless of where customers are based. However, it becomes more grey when there's value elsewhere in the chain - for example, if you have contractors in the US, or perhaps a warehouse there, distributors, a business registered there (e.g an LLC) - then there could be a sufficient fact pattern to suggest its foreign sourced.
Question Andrew: I would like to book a call but not sure if you have a solution for me. Currently UAE tax resident and benefit from 0% income tax as a US stock market trader but would rather not be obligated to spend anymore time there. I don't mind moving around so I am not considered a tax resident anywhere. However once I move from UAE, my brokerage account and banks need to be updated where I am tax resident, and then I also will need to withdraw to a bank account from that same country. Do you see a solution for me as a stock market trader that wants to have no tax on trading US equities (or be exempt) and have 0% inheritance and gift tax?
Hi, when it comes to longer term basis (i.e picking up a tax residency) it would be good to have somewhere that's friendly to foreign capital gains e.g Malaysia, Thailand, Philippines, Uruguay, Paraguay etc. That said, being tax nomadic is still an option. I know a lot of traders who simply don't change their address (it of course will depend on how strict the brokerage is) or they pick a temporary address in one of the places they have resided in (that has a tax friendly status) so they have some backup argument in case they're questioned. Generally what I find is that brokerages, banks etc are not really concerned about your tax residency, but they're often legally obliged to know where their customers are for regulatory reasons, so they'll ask for tax residency details as a proxy for 'where do you live'. So you'll often find no further questions if and when you do change your tax residency. But I guess this one is quite case dependent and highly dependant on the actual brokerages you are using.
@@WorldTaxAndy I also don't live in one place and just use the first address I was staying. However this doesn't solve the problem that I need to come back every 6 months because if you live outside the UAE for more than six months continuously, your residence visa will be nullified automatically. If I don't have an active/valid residence visa, I wont be able to update it when the bank asks for it.
@@Frag1ty Okay I wonder whether a company solution might be an option here - I know a lot of traders who run their US.equity trading via Hong Kong or Singapore entities which do not pay any tax on trades - then can then pay themselves a salary/dividends direct from the entity, and if structured properly (no tax presence in those jurisdictions) they can usually get no tax at company level
So, if I stay there on a nomad visa for a year, income from US into UK bank account. Tax registered in UK. I will have to register in Malaysia tax revenue but not pay tax? None is Malaysian sourced.
Hi, thanks for the question - yes, if you're on the nomad visa & spend > 6 months in Malaysia, they'll still expect you to register with them & essentially file a 'nil' tax return declaring that you owe no taxes in Malaysia In practice, I have seen people ignore this because Malaysia tends to only go hard on people who have evaded taxes - they aren't as concerned about people who owe 0 taxes & don't file - so in your scenario with no Malaysian sourced income, if you don't file I doubt it would be much of a problem. But registering & filing a return potentially avoids an awkward conversation in future if, say, you were to reapply for another Malaysian visa and they ask you for your past history in Malaysia which could include evidence of tax return compliance
Thank you @@WorldTaxAndy - you're the only one discussing this as far as I can see, so I was very pleased to see your video on the topic. Will be applying for the nomad visa at the beggining early next year so just getting myself organized.
@@theremotehive thanks & hugely appreciated! Yes it’s difficult to get information in this area as its all still so new & the Malaysian tax authority hasn’t been very clear. Glad it was useful!
@@WorldTaxAndy But if you receive income from another country into an account in another country while you work here - in Malaysia, isn't that income from Malaysia? And if you are in Malaysia for less than 182 days, you shouldn't file a tax declaration, even if you've opened a Tax ID, when you got a nomad visa? I work for an Irish company, and we have a contract with me as an individual entrepreneur in Georgia. I receive my income into a Georgian bank account and pay taxes in Georgia every month. So given this setup, does it mean I do not have to pay taxes in Malaysia?
@@kryshko "But if you receive income from another country into an account in another country while you work here - in Malaysia, isn't that income from Malaysia? And if you are in Malaysia for less than 182 days, you shouldn't file a tax declaration, even if you've opened a Tax ID, when you got a nomad visa? " Correct - your visa / Tax ID status is irrelevant to tax residency. If you spend less than 182 days in Malaysia then you are not a tax resident therefore have no tax filing obligation. Receiving income into other country accounts - so the account you receieve income into is not important - technically if you're a Malaysian tax resident you can be taxed on this IF the money is deemed to be Malaysian sourced. If you're an employee working in Malaysia most of the time to earn that salary, then they are likely to deem this as Malaysian sourced. But this can depend on the nature of your work and the company. "I work for an Irish company, and we have a contract with me as an individual entrepreneur in Georgia. I receive my income into a Georgian bank account and pay taxes in Georgia every month. So given this setup, does it mean I do not have to pay taxes in Malaysia?" So Malaysia offers tax credits against tax paid in foreign countries. It depends on how much tax you pay in Georgia to see how much tax credit you would get in Malaysia (also, there is no double tax treaty yet between the two countries so the tax credit is limited to 50% of tax paid). But ultimately you would have to be a tax resident of Malaysia first (i.e more than 182 days in Malaysia) for this to be a consideration.
For a real estate wholesaling company whose LLC is addressed in Texas, it sounds like this means if im conducting operations in Malaysia and virtually signing and assigning contracts from my malaysian home office it would still be considered malaysian sourced income. Is there a way to tick those boxes to show this income as foreign sourced to take advantage of the low tax rate?
Hi Jacob, thanks for the question and this is a relatively unique example because real estate and physical property in general tends to be an exception. So long as the properties themselves are located outside of Malaysia then the income you generate would be considered foreign sourced. So long as you don't set up your own physical presence in Malaysia (such as leasing a full time office) then it shouldn't bring you into to the scope of Malay sourced income.
I have a 4 year contract for online marketing services from a U.K. company. I am not yet living in Malaysia but will be soon via digital nomad visa. The contract started before I came to Malaysia. When I move to Malaysia I will be working from home. Is this income considered locally sourced income? I assume it is?
Hi Nick, this could potentially be viewed as Malaysian sourced income if Malaysia is the only place you work from during the year, however if the income has already been subject to tax in the UK then this will generally be exempt from further taxation under the current rules.
What if you are a salaried employee of western country like Canada Australia or NZ and you get a digital Nomad visa for Malaysia and continue to do your work ... even if you are not any more in Canada/ ANZ since you area local employee ... and will be taxed,, so will that person be also taxed in Malaysia ?
Thankfully Canada, Australia and New Zealand all have Double Tax Treaty agreements with Malaysia - meaning that you cannot be subject to double taxation. You will only pay tax in one or the other country. Lets take Canada as an example, under the Malaysia/Canada Double Tax Treaty, employment income is usually taxed in the country where it's exercised. If you spend > 6 months in Malaysia, this would be Malaysia. So in theory, your Canadian employer shouldn't deduct income taxes from your salary, they'd pay you the gross amount before tax. And then you file a tax return with Malaysia & pay taxes there. In practice, this can be a little messy. Sometimes leaving things as they are (e.g Canada still withholding tax for you) can work. I have seen cases where Malaysia has been satisfied that the worker was paying taxes in their home county (a double tax treaty country like Canada) and taken the matter no further. I think they are more aggressive when it turns out the worker is paying 0 taxes anywhere in the world.
Hi, thanks a lot for your great video. I'd like to ask you a question please: As a French IT freelancer, my income is exclusively earned and taxed in France (income is domiciled in a French bank account). My clients are located in France as well. I would like to keep my business as it is in France but work remotely from Malaysia through the De Rantau Digital Nomad Pass. As you know, De Rantau visa holder cannot open a bank account. So I'll keep my income in my french bank. I would like clarification on whether I will be liable for taxes in Malaysia on my french income ? Your guidance on this matter would be highly appreciated. Thanks
Hi thanks for your question. If your income is earned & taxed in France then you won't have to worry about Malaysian taxes on this on the De Rantau pass. This is because at present, Malaysia offers a tax exemption for income already taxed in a foreign country which has a headline tax rate above 15% (which France does). So you'd be clear if this is your current setup.
I appreciate your video; it was helpful. However, I'm still unclear about my tax situation. I'm an Estonian freelancer working as a video editor for an agency overseas, currently paying a flat 20% tax on my income. I'm considering moving to Kuala Lumpur. If I work from Malaysia, will my income be considered Malaysian-sourced, and will I have to pay both 20% tax in Estonia and an additional 30% in Malaysia, despite not being a resident there? Or do I just pay my 20% until I'm tax-resident in Malaysia?
Hi, thanks for the kind words. In this case you won't have any additional tax to pay. Malaysia also has a provision in the tax law that says that if your foreign income was already subject to taxes in a country with a headline tax rate of 15% or higher (which Estonia does) then this won't be taxed again in Malaysia. You can continue paying the 20% Estonian tax as a non-resident, and also as a tax resident of Malaysia, without further Malaysian tax obligations
@@WorldTaxAndy Hi Andy! Thank you very much for the clarifications. I wanted to ask, if an IT specialist works remotely for a company in Uzbekistan, where there is a reduced tax rate of 7.5% for some IT companies, and there is a double-tax treaty between Uzbekistan and Malaysia, does it matter that the withheld tax is less than 15%, or is that not important and the resident will not have to pay additional tax on this income? Thank you very much!
@@sergeychekurin6054 Hi Sergey, this will still be eligible for exemption in Malaysia because the headline corporate tax rate in Uzbekistan is 15%. Thankfully Malaysia doesn’t care about the actual rate paid or any reliefs provided by the other jurisdiction. As long as the headline rate is 15% or higher then it qualifies. Basically the reason they care about the headline rate is that generally this means the country is not a traditional ‘tax haven’. So Malaysia’s primary aim is to leave income alone for now when its not being derived from tax havens.
Hi Andy with the digital nomad visa would it cover people who invest in crypto currency and receive staking rewards as a source of income? I’m currently on a pension from the Australian government so supporting myself isn’t an issue it’s trying to find a way to Malaysia that I can afford (MM2H program is out of reach)
Hi Mitchell, in terms of applying for your visa, as long as you can demonstrate that the value of your staking rewards is enough to meet the nomad visa threshold then you should have no problems getting the visa approved. On the tax side of things, crypto can be a bit of a grey area, but the general consensus from Malaysian advisors I've worked with is that it would be taxable if you're holding your staked crypto in a Malaysian crypto exchange, however if its a foreign exchange or perhaps you're staking it directly on a DeFi platform / smart contract then this isn't Malaysian sourced thus non taxable
Thanks Andy appreciate the advise, I’ve sent an email to degen tax advisors with some questions I need help if they are something you can help with I would like to book an appointment with you.
Hi, Wonderfull video. I'm selling products on Amazon USA, through an USA LLC, and I supply myself from China. I'm a single member and manage the whole things by myself. Getting the DE RANTAU Visa in Malaysia, and live there for the next 2 years, will I be considered Malaysian sourced income taxable ? Or foreign ? All the top decision of my business will be made on my desk in my room in KLCC. Thanks a bunch for your feedback
Hi Tim thanks for the kind words. This is potentially a grey area and can get quite subjective in absence of clear rules regarding online businesses, so generally we just need to piece together as many of the facts as possible and try to see it from Malaysia's point of view. If the authorities deem that the key value of the business is being controlled and managed from Malaysia, then they can consider it to be Malaysian sourced income. That being said, as its a US LLC with Amazon US as a marketplace, and Chinese supplies, there is an argument that a significant proportion of the value chain is actually outside of Malaysia. However, without external people making decisions, it might be hard to argue that there is sufficient presence outside of Malaysia to deem it foreign sourced. For example, Malaysia might ask - if you did not do any work in Malaysia, could the business continue to function, or is it crucial that you work on it to maintain it? In which case, they have a strong argument that its Malaysian sourced income. Whereas, if it could run by itself to a certain extent, requiring perhaps a light touch from you now and again, then it gives you a stronger argument that its foreign sourced.
@@WorldTaxAndy Thank you so much for your prompt answer and all details. Any advice on which taxes advisor I need to contact to clarify and secure this ?
Hi, feel free to reach out at either of the following: - Calendly: calendly.com/worldtaxandy - Company email: advisers@degenwealth.com - Website: www.degenwealth.com
If i am employeed in another country already which allow me to work remote, and i get freelance visa in malaysia. Am i going to pay tax in malaysia or in the country which i am coming from and employed ?
Hi, if you're a Malaysian tax resident (by spending > 182 days in Malaysia in the year) then technically you should file a Malaysian tax return. However, if your employer is withholding taxes in their country, then you would generally not pay taxes in Malaysia IF there is a double tax treaty agreement between Malaysia and that country. These agreements basically prevent you from being taxed twice on the same income. Let's say your employer is in Spain - and they are withholding Spanish income taxes on your salary. Malaysia & Spain have a Double Tax Treaty in place, meaning that your income would not be taxed twice - you would essentially be given a 'credit' for tax paid when you go to file your Malaysian return. However this is a complex area of international tax law and every situation is unique so note this is general advice.
Yes phl.hasil.gov.my/pdf/pdfam/Pakistan.pdf You can read this for the specifics, but this will generally mean that you will be protected from double taxation.
Just to let know I will not be going there ever again because it's DISGUSTING JUST ROBBING TOURISTS I JUST PAYED A THE HILTON ..BYE BYE MALAYSIA FOR ME.
Great video thanks. I have one question: i m a freelance serving multiple clients from different countries. You can also call me contractor and i sell consulting services in blockchain sector an bussiness related services. All contracts are signed online through docusign so i should consider my source of income from Malaysia. So can you make a video about the amount of taxes to pay?
Hi, thanks for the kind words. If you're a tax resident of Malaysia then yes you'd likely have to consider this Malay sourced income and pay taxes accordingly. I've put the personal income tax rates below, but I will make a video to cover this in more detail later: For income up to MYR 5,000, the tax rate is 0%. Incomes between MYR 5,001 and MYR 20,000 are taxed at 1% on the amount exceeding MYR 5,000. Incomes between MYR 20,001 and MYR 35,000 are taxed at 3% on the amount exceeding MYR 20,000, plus a fixed amount. Income between MYR 35,001 and MYR 50,000 is taxed at 6% on the excess over MYR 35,000. Income between MYR 50,001 and MYR 70,000 is taxed at 11% on the excess over MYR 50,000. Income between MYR 70,001 and MYR 100,000 is taxed at 19% on the excess over MYR 70,000. Income between MYR 100,001 and MYR 400,000 is taxed at 25% on the excess over MYR 100,000. Income between MYR 400,001 and MYR 600,000 is taxed at 26% on the excess over MYR 400,000. Income between MYR 600,001 and MYR 2,000,000 is taxed at 28% on the excess over MYR 600,000. Incomes exceeding MYR 2,000,000 are taxed at 30% on the excess over MYR 2,000,000
@@WorldTaxAndy thanks for the complete answer. They are quite high but I don't understand why the tax territorial principle is not apply. If i am rax resident in Malta and my company is established in Georgia or Ireland i dont have to pay tax in Malta since the income is made by my company in Ireland or Georgia
@@unpalumpa5143 In the case where its a foreign company then this is different. In the case where you're purely freelance and working in Malaysia as a freelancer, then Malaysia can claim this is local sourced income. However, if your Irish company is the company which deals with clients, invoices etc and receives the income, then this is not Malay sourced income.
Best explanation I heard so far. Clear, concise and straightforward. Bravo.
There should be more people like you in this world. Clear, concise and straightforward advice.
Keep up the great work 😊
I am a UK citizen but a UK non-resident and looking to live out here (SE Asia) permanently.
I have an Amazon FBA store (sole trader) within the UK and the EU selling physical products.
Would you still need to pay income tax in the UK or EU?
I presume that forming a LTD company you will have to pay income, CT etc as this meets different requirements.
I understand that when the VAT threshold is reached within a certain country you must register and pay VAT too.
Thank you very much for the amazing comments, it's hugely appreciated!
Yeah I work with a lot of UK Amazon FBA traders - as a non-UK resident you won't have any UK income tax to worry about so long as you don't have a UK Ltd company. Similarly you'll have no EU based income tax liabilities if you're not tax resident in any EU country. If you did want a company it would be worth considering a US LLC or a UK LLP (these are both pass-through vehicles and don't pay corporate tax).
And yes, VAT is different and generally is unchanged regardless of whether you're a company / sole trader - as you said it depends on whether you have reached a certain threshold for customers in a certain location (e.g £85k in the UK, EUR 75k in Ireland (products), EUR 22k in Germany etc)
Amazing video mate! I was curious to hear your thoughts about being a content creator with a business in the US living in Malaysia on a nomad visa. If the creator is already paying and filing taxes in the US. Would they be subject to pay taxes here too?
Hi Mike, thanks for the kind words!
Content creation is definitely an interesting one as it can highly depend on your specific set up. For example, if the content business is located in the US, there's a LLC in place, and perhaps even some physical presence in the US (office, studio, equipment, stock etc), and maybe even the intellectual property (such as your brand, domain name, website etc) is registered in the US - then there's a strong case that the income is US sourced and not taxable in Malaysia.
For content creators living in Malaysia full time & making content in Malaysia, they don't have any other countries in the chain, no foreign companies etc and they clearly do all the 'profit generating' activities in Malaysia, then it's going to be considered Malaysian sourced income therefore taxable in Malaysia. As an Amercian, you would claim a 'foreign tax credit' (basically any Malay taxes you pay would be deducted against your US tax bill) on your US tax return to avoid double taxation.
@@WorldTaxAndysúper helpful mate. Thank you!
This is super interesting thank you so much for taking the time to explain complicated systems so clearly and eloquently. So if I am a freelancer working with a UK based company as a contractor with them, so not an employee, and I write articles for their website, it sounds like that would be considered Malaysian sourced income, correct?
great channel Andy :)
Thanks Shabs, much appreciated!
Hi Andy, this is great. crisp, clear, concise, and to the point!
question, I been staying in Malaysia for a year now, on a DE Rantau Nomad pass. my work is based out of Singapore, but since I work from home, I reside mostly in Malaysia.
Any suggestions on how to go about taxation? i am already paying tax in Singapore (there is DTA with Malaysia as well).
Would love to know as well
Hi, thanks for the kind words - up until 2027 (for now, they may extend this) there's an exemption for foreign sourced income (which includes Singapore) which has been subject to tax of a 'similar nature' as Malaysian income tax (which Singaporean income tax qualifies as) in the country of origin. Interestingly & confusingly, the Malaysian take on this with regards to source/origin appears to be different to how they normally treat 'source' - so even if the work is done in Malaysia, the country of origin is deemed to be SG if the company is in SG and the money comes from a SG bank account. So ultimately if your tax is already being paid there, then this exemption can cover your obligations.
Thanks this was really really helpful
Thanks for the great comment! Hope to bring a lot more useful videos in future
Very informative! Now, let’s say John is a shareholder and director of a UK-registered limited company that also has other shareholders and directors located elsewhere. John doesn’t sign any contracts on behalf of the company (other directors do), but he does some director work for the company while living in Malaysia for which he receives a director salary. On top of that he also receives dividends as he’s one of the company shareholders. According to your video his director salary would be taxed in Malaysia, but not the dividends which are considered passive income, am I correct?
Hi, yes this would be correct so long as there's a justification that the dividends are truly non-Malaysian sourced in nature (i.e that the profits made to pay out those dividends are sourced elsewhere).
There are new rules about foreign dividends needing to have 'economic substance' in the foreign jurisdiction in order to qualify for the tax exemption - economic substance broadly meaning does the company actually exist & perform activities outside of Malaysia, or is it just incorporated outside of Malaysia to obtain a tax benefit (and mostly run in Malaysia). On the basis that other people are working on the company outside of Malaysia then the substance requirement would be met. Dividends also need to be sourced from a country which has a headline tax rate of 15% of more (which the UK does via its corporate tax rate of 19-25%). So as a rule of thumb, dividends from a tax haven could be more contentious. But they haven't clarified this yet - many Malaysian residents have dividends coming from Dubai, and they have had mixed messages on whether these will qualify yet, so this is definitely an evolving issue
Interesting that NK doesnt have income tax.
Great video 🔥
Thanks man ❤
Thanks for the great comment - Lots more videos to come!
@@WorldTaxAndyI'm an Indian citizen living in India. If I invest in a condo in Kuala Lumpur to generate rental income, how much % income tax would I have to pay in Malaysia? And will I be double taxed in India?
Great video! I still have some questions 😀. I intend to work remotely (for a UK company) in Malaysia as a Nomad Digital, I believe I am classed as a Malaysian Tax Resident (will be here for > 182 years) and my income is from my UK employment but work is performed in Malaysia. So I guess I will pay tax in Malaysia but how do I stop paying UK tax on my salary - this is currently being taxed at source via PAYE. Thanks in advance.
If you get the `DE Rantau remote work visa` and provide consulting services while in Malaysia, will that be considered taxable income?
Hi Andy, thank you for that advice. I have a query, say you are deemed a tax resident in Malaysia due to spending more than 6 months in Malaysia but income is sourced from a UK employer, but you work remotely in Malaysia. You do not work from an office but rather your home in Malaysia and do not conclude contracts, you are simply an accessory to the core business which is in the UK i.e. Complaint Admin. Double taxation policy: "Notwithstanding the preceding provisions of this article, the term ‘permanent establishment’ shall be
deemed not to include: (e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the
enterprise, any other activity of a preparatory or auxiliary character". Wouldn't the role of Complaint Admin come under preparatory or auxiliary character? i would be very grateful for your advice?
Very insightful video! Thanks for sharing this Andy.
Quick question:
If a freelance consultant who works remotely in Malaysia (for less than 183 days) and received fees from foreign clients outside of Malaysia, do they need to file taxes in Malaysia if they've already paid tax to their origin country of citizenship?
Hi Zenas thanks for the kind words - generally if you don't spend 183 days in Malaysia AND have paid tax at source on your income, then you won't need to file taxes in Malaysia. There are some nuances to this but if your origin country has a headline tax rate of 15% or more (essentially, if it isn't a tax haven) then this is almost always exempt from tax in Malaysia.
Hi Andy,
Do you have any experience with the DE Rantau programme? and would you recommend?
Cheers
Great video Andy. This is very helpful.
Was wondering if you have a view on how active day traders are taxed in Malaysia, if one trades US futures whilst living in Malaysia. Trading could be either through a US/London based prop firm, and/or on one's own account using a US based broker. All profits are retained in a Singapore bank account.
My understanding is that income from active trading on overseas exchanges is regarded as foreign source income in Malaysia, if not remitted to Malaysia, and would not be taxable in Malaysia, even if the trader was Malaysian tax resident.
Is that correct?
Or if not, have you seen a tax efficient solution for this situation?
Many thanks indeed
Thanks for the comment and great question.
This is definitely a bit of a grey area - for traders in general you first off try to establish whether your trading is 'capital' or 'income' in nature. Because if its capital, then there's no concerns as Malaysia does not tax capital gains. But it does tax income items.
The general characteristics Malaysia believes determines that trading activity is income rather than capital are:
- Large number of trades (thousands per year)
- Short period of ownership (frequently holding onto assets for a few days or weeks)
- Using high-frequency exchanges
- Work done (by you) to increase the marketability of the traded asset
- Not offered for sale in a forced manner (e.g., the sudden need of cash; foreclosure)
- The motive is business related rather than investment (this can be subjective & hard to argue)
- Obtaining short-term financing to trade
Now assuming you will tick the box of your trades being income in nature (highly likely as a futures trader you will meet this), the next step is whether the income is foreign sourced or not. If it is foreign sourced, then it will be exempt if not remitted into Malaysia (e.g Singapore instead).
This is the part which is grey. The arguments I have seen used by tax lawyers in the past to support the foreign sourced nature (therefore non-taxability of this type of activity) is that the underlying activities of the traded assets (lets say they're futures on US equities) are occurring outside of Malaysia. Furthermore the hosting platform (e.g the US based broker) is in the US. There is no case law I'm aware of that suggests Malaysia disagrees with this assessment.
To just be careful - what I would say is that if the assets were in Malaysia, or via a Malaysian brokerage, then I think there's no real dispute, it would be taxable. On a similar note, the Malaysian authority also deems a lot of crypto trading taxable when it's not done via a foreign broker (lets say its via a Decentralised Exchange) because the trader himself is holding the assets in Malaysia, and using his skills to generate profits in Malaysia.
But note this is likely an evolving area, it's not one Malaysia has paid much attention to in the past. So for now I think the general consensus I've seen recommended by lawyers (i.e that in your specific situation it wouldn't be taxable if not remitted) is likely sound. But it's definitely one worth keeping an eye on. Also note that all of Malaysia's non-remitted income exemption is scheduled to change in 2027 (i.e the fact the income is held abroad will no longer provide tax protection) so worth being aware of for planning purposes
@@WorldTaxAndy Thank you Andy, this is a very helpful perspective. I love your clarity of thought (which is often surprisingly lacking in the Tax advisory space!). Much appreciated.
Will surely connect with you nearer the time once I'm ready to move forward. I hope to be in KL within the next few months, and take it from there.
Do you also help with Immigration/Visas for Malaysia? I'm a British citizen.
I'd ideally want to get the MM2H (waiting for the new rules), or failing which, the De Rantau. Not that keen on the Labuan Director Visa.
Cheers
@@FrozenSkyy Thanks for the kind words, hugely appreciated! I'm not a visa expert so I don't specifically help with getting these set up but I've seen a lot of clients over the years go through the processes so always happy to provide insights in what I do know. The MM2H could be interesting again (it's definitely fallen off in the past year or so). The Labuan Director Visa seems to often be fraught with complications, rule changes etc so I'd agree with avoiding this if possible
@@WorldTaxAndy Thanks so much Andy. Appreciate your feedback. Will surely connect once I'm ready to move forward with this. Cheers.
great video
Super Informative and Unique video in entire youtube !
My question is :
How about if Lived in Malaysia for 1 year on Digital Nomad Visa with a W2 Job from our own US LLC as Software Engineer , can we file US Income Tax ( With US FEIE at around 0% Tax bracket ) but how do we prove to Malaysia that we filed US Taxes so no need to pay any tax to Malaysia ..?
Thanks for the kind words - yes as an American you should be filing for US income taxes and definitely claiming the FEIE if you meet the requirements (which it sounds like you do given 1 year spent in Malaysia. The US situation from a Malaysian perspective is slightly complex though because Malaysia and the US do not have a double taxation treaty. However, in general Malaysia seems to be accepting of foreign income as non taxable if you can prove it was subject to tax in a country with a tax rate above 15%. This would include the US. This doesn't mean you need to have paid this amount of tax, it's just that it needs to have been declared in a country with a tax rate above 15% on a tax return. Your proof therefore can be the filed US 1040 form. Note: this is an evolving area and we definitely need some further guidance from Malaysia on this because these rules are fairly new and we don't have any case law yet.
@@WorldTaxAndy That is very detailed Answer , Are you Local to Malaysia or Specialized in Malaysia Tax ..?
@@10X_Brain_Time I’m specialised in international tax & have been for 10 years. But specifically my focus is mostly on Malaysia, Singapore, US, UK. This is where I’ve lived & worked over the years and these are the tax systems I’m most familiar with. I also run a tax consulting firm and we employ over 30 local tax lawyers & accountants including specialists in Malaysia among others. So my own knowledge & experience plus those of my colleagues/business partners allows me to advise in these areas
Loved the video Andy, thanks for sharing and super helpful. I was wondering, if I am working remotely from Malaysia under the De Rantau pass for more than 6 months for an Australian company, earning in AUD, and the Australian tax office is withholding my taxes, is it ok to just go ahead and do my tax return in Australia? I know the countries have a double-tax treaty but unsure how it works. Is there a need to inform the Malaysian tax office? or is there no need to do anything? I know that De Rantau is asking for tax receipt for De Rantau pass renewals.
Hi, thanks for the kind words. Yes so this is a common scenario for Australians in Malaysia and generally the double tax treaty will protect you from being taxed again in Malaysia if you have a reasonable claim that you're an Australian resident (this doesn't mean spending X number of days in Australia, it could be that you simply have ties such as a home available, assets family, intent to return one day etc). On this basis you can generally claim to be an Australian tax resident, meaning nothing changes when living in Malaysia. The renewals process does accept foreign tax returns - I've seen people with Australian, Canadian and UK tax returns accepted when they go to renew their pass so this shouldn't be an issue if you have evidence of taxes paid in Australia
@@WorldTaxAndy thanks Andy, do you provide services in helping us file these taxes in Malaysia as a digital nomad? do you work with a partner (or have a recommendation) that's quite reasonable in price?
@@fitzeralifestyle5293 No problem. Whilst I don't currently work with an official partner, from all the clients I do work with in Malaysia I've frequently heard good things about YAU & CO (yauco.com.my/) and MEGAT & CO (www.megatco.com/) but its always worth shopping around as at certain times of year you'll find some of them are willing to offer deals on tax return filings
What if you own an e-commerce business, the place of transaction is online in US, so will it be taxable? Thanks for this, bc I heard from nomad capitalist that it’s tax free if foreign income is not remitted in Malaysia but he didn’t mention about how certain online businesses would be considered as taxable work.
Hi, e-com businesses are very much case by case and there's no black & white rule because tax laws just haven't caught up with the modern business world. However its primarily about where the value is being generated. For example, if you're the sole owner, working on the business in Malaysia & living full time in Malaysia - Malaysia could argue this constitutes Malaysian sourced income due to you being the sole value creator, regardless of where customers are based. However, it becomes more grey when there's value elsewhere in the chain - for example, if you have contractors in the US, or perhaps a warehouse there, distributors, a business registered there (e.g an LLC) - then there could be a sufficient fact pattern to suggest its foreign sourced.
Question Andrew: I would like to book a call but not sure if you have a solution for me. Currently UAE tax resident and benefit from 0% income tax as a US stock market trader but would rather not be obligated to spend anymore time there. I don't mind moving around so I am not considered a tax resident anywhere. However once I move from UAE, my brokerage account and banks need to be updated where I am tax resident, and then I also will need to withdraw to a bank account from that same country. Do you see a solution for me as a stock market trader that wants to have no tax on trading US equities (or be exempt) and have 0% inheritance and gift tax?
Hi, when it comes to longer term basis (i.e picking up a tax residency) it would be good to have somewhere that's friendly to foreign capital gains e.g Malaysia, Thailand, Philippines, Uruguay, Paraguay etc. That said, being tax nomadic is still an option. I know a lot of traders who simply don't change their address (it of course will depend on how strict the brokerage is) or they pick a temporary address in one of the places they have resided in (that has a tax friendly status) so they have some backup argument in case they're questioned. Generally what I find is that brokerages, banks etc are not really concerned about your tax residency, but they're often legally obliged to know where their customers are for regulatory reasons, so they'll ask for tax residency details as a proxy for 'where do you live'. So you'll often find no further questions if and when you do change your tax residency. But I guess this one is quite case dependent and highly dependant on the actual brokerages you are using.
@@WorldTaxAndy I also don't live in one place and just use the first address I was staying. However this doesn't solve the problem that I need to come back every 6 months because if you live outside the UAE for more than six months continuously, your residence visa will be nullified automatically. If I don't have an active/valid residence visa, I wont be able to update it when the bank asks for it.
@@Frag1ty Okay I wonder whether a company solution might be an option here - I know a lot of traders who run their US.equity trading via Hong Kong or Singapore entities which do not pay any tax on trades - then can then pay themselves a salary/dividends direct from the entity, and if structured properly (no tax presence in those jurisdictions) they can usually get no tax at company level
So, if I stay there on a nomad visa for a year, income from US into UK bank account. Tax registered in UK. I will have to register in Malaysia tax revenue but not pay tax? None is Malaysian sourced.
Hi, thanks for the question - yes, if you're on the nomad visa & spend > 6 months in Malaysia, they'll still expect you to register with them & essentially file a 'nil' tax return declaring that you owe no taxes in Malaysia
In practice, I have seen people ignore this because Malaysia tends to only go hard on people who have evaded taxes - they aren't as concerned about people who owe 0 taxes & don't file - so in your scenario with no Malaysian sourced income, if you don't file I doubt it would be much of a problem.
But registering & filing a return potentially avoids an awkward conversation in future if, say, you were to reapply for another Malaysian visa and they ask you for your past history in Malaysia which could include evidence of tax return compliance
Thank you @@WorldTaxAndy - you're the only one discussing this as far as I can see, so I was very pleased to see your video on the topic. Will be applying for the nomad visa at the beggining early next year so just getting myself organized.
@@theremotehive thanks & hugely appreciated! Yes it’s difficult to get information in this area as its all still so new & the Malaysian tax authority hasn’t been very clear. Glad it was useful!
@@WorldTaxAndy But if you receive income from another country into an account in another country while you work here - in Malaysia, isn't that income from Malaysia?
And if you are in Malaysia for less than 182 days, you shouldn't file a tax declaration, even if you've opened a Tax ID, when you got a nomad visa?
I work for an Irish company, and we have a contract with me as an individual entrepreneur in Georgia. I receive my income into a Georgian bank account and pay taxes in Georgia every month. So given this setup, does it mean I do not have to pay taxes in Malaysia?
@@kryshko "But if you receive income from another country into an account in another country while you work here - in Malaysia, isn't that income from Malaysia? And if you are in Malaysia for less than 182 days, you shouldn't file a tax declaration, even if you've opened a Tax ID, when you got a nomad visa? "
Correct - your visa / Tax ID status is irrelevant to tax residency. If you spend less than 182 days in Malaysia then you are not a tax resident therefore have no tax filing obligation.
Receiving income into other country accounts - so the account you receieve income into is not important - technically if you're a Malaysian tax resident you can be taxed on this IF the money is deemed to be Malaysian sourced. If you're an employee working in Malaysia most of the time to earn that salary, then they are likely to deem this as Malaysian sourced. But this can depend on the nature of your work and the company.
"I work for an Irish company, and we have a contract with me as an individual entrepreneur in Georgia. I receive my income into a Georgian bank account and pay taxes in Georgia every month. So given this setup, does it mean I do not have to pay taxes in Malaysia?"
So Malaysia offers tax credits against tax paid in foreign countries. It depends on how much tax you pay in Georgia to see how much tax credit you would get in Malaysia (also, there is no double tax treaty yet between the two countries so the tax credit is limited to 50% of tax paid). But ultimately you would have to be a tax resident of Malaysia first (i.e more than 182 days in Malaysia) for this to be a consideration.
Hey Andy, very useful video! Is possible for a personal consultation? Thank You
Hi, thanks for your comment! Yes, feel free to email advisers@degenwealth.com or book a consultation at calendly.com/degenwealth/taxconsultation
@@WorldTaxAndy I emailed you today about consultation, it might have gone to spam, the email subject is "Tax consultancy"
For a real estate wholesaling company whose LLC is addressed in Texas, it sounds like this means if im conducting operations in Malaysia and virtually signing and assigning contracts from my malaysian home office it would still be considered malaysian sourced income. Is there a way to tick those boxes to show this income as foreign sourced to take advantage of the low tax rate?
Hi Jacob, thanks for the question and this is a relatively unique example because real estate and physical property in general tends to be an exception. So long as the properties themselves are located outside of Malaysia then the income you generate would be considered foreign sourced. So long as you don't set up your own physical presence in Malaysia (such as leasing a full time office) then it shouldn't bring you into to the scope of Malay sourced income.
@@WorldTaxAndy i look forward to working with you my friend thankyou for the quick reply
I have a 4 year contract for online marketing services from a U.K. company. I am not yet living in Malaysia but will be soon via digital nomad visa.
The contract started before I came to Malaysia.
When I move to Malaysia I will be working from home. Is this income considered locally sourced income?
I assume it is?
Hi Nick, this could potentially be viewed as Malaysian sourced income if Malaysia is the only place you work from during the year, however if the income has already been subject to tax in the UK then this will generally be exempt from further taxation under the current rules.
What if you are a salaried employee of western country like Canada Australia or NZ and you get a digital Nomad visa for Malaysia and continue to do your work ... even if you are not any more in Canada/ ANZ since you area local employee ... and will be taxed,, so will that person be also taxed in Malaysia ?
Thankfully Canada, Australia and New Zealand all have Double Tax Treaty agreements with Malaysia - meaning that you cannot be subject to double taxation. You will only pay tax in one or the other country.
Lets take Canada as an example, under the Malaysia/Canada Double Tax Treaty, employment income is usually taxed in the country where it's exercised. If you spend > 6 months in Malaysia, this would be Malaysia. So in theory, your Canadian employer shouldn't deduct income taxes from your salary, they'd pay you the gross amount before tax. And then you file a tax return with Malaysia & pay taxes there.
In practice, this can be a little messy. Sometimes leaving things as they are (e.g Canada still withholding tax for you) can work. I have seen cases where Malaysia has been satisfied that the worker was paying taxes in their home county (a double tax treaty country like Canada) and taken the matter no further. I think they are more aggressive when it turns out the worker is paying 0 taxes anywhere in the world.
Hi, thanks a lot for your great video. I'd like to ask you a question please:
As a French IT freelancer, my income is exclusively earned and taxed in France (income is domiciled in a French bank account). My clients are located in France as well.
I would like to keep my business as it is in France but work remotely from Malaysia through the De Rantau Digital Nomad Pass.
As you know, De Rantau visa holder cannot open a bank account. So I'll keep my income in my french bank.
I would like clarification on whether I will be liable for taxes in Malaysia on my french income ?
Your guidance on this matter would be highly appreciated.
Thanks
Hi thanks for your question. If your income is earned & taxed in France then you won't have to worry about Malaysian taxes on this on the De Rantau pass. This is because at present, Malaysia offers a tax exemption for income already taxed in a foreign country which has a headline tax rate above 15% (which France does). So you'd be clear if this is your current setup.
Thanks a lot for your valuable information
I appreciate your video; it was helpful. However, I'm still unclear about my tax situation. I'm an Estonian freelancer working as a video editor for an agency overseas, currently paying a flat 20% tax on my income. I'm considering moving to Kuala Lumpur. If I work from Malaysia, will my income be considered Malaysian-sourced, and will I have to pay both 20% tax in Estonia and an additional 30% in Malaysia, despite not being a resident there? Or do I just pay my 20% until I'm tax-resident in Malaysia?
Hi, thanks for the kind words. In this case you won't have any additional tax to pay. Malaysia also has a provision in the tax law that says that if your foreign income was already subject to taxes in a country with a headline tax rate of 15% or higher (which Estonia does) then this won't be taxed again in Malaysia. You can continue paying the 20% Estonian tax as a non-resident, and also as a tax resident of Malaysia, without further Malaysian tax obligations
@@WorldTaxAndy Hi Andy! Thank you very much for the clarifications. I wanted to ask, if an IT specialist works remotely for a company in Uzbekistan, where there is a reduced tax rate of 7.5% for some IT companies, and there is a double-tax treaty between Uzbekistan and Malaysia, does it matter that the withheld tax is less than 15%, or is that not important and the resident will not have to pay additional tax on this income? Thank you very much!
@@sergeychekurin6054 Hi Sergey, this will still be eligible for exemption in Malaysia because the headline corporate tax rate in Uzbekistan is 15%. Thankfully Malaysia doesn’t care about the actual rate paid or any reliefs provided by the other jurisdiction. As long as the headline rate is 15% or higher then it qualifies. Basically the reason they care about the headline rate is that generally this means the country is not a traditional ‘tax haven’. So Malaysia’s primary aim is to leave income alone for now when its not being derived from tax havens.
Hi Andy with the digital nomad visa would it cover people who invest in crypto currency and receive staking rewards as a source of income? I’m currently on a pension from the Australian government so supporting myself isn’t an issue it’s trying to find a way to Malaysia that I can afford (MM2H program is out of reach)
Hi Mitchell, in terms of applying for your visa, as long as you can demonstrate that the value of your staking rewards is enough to meet the nomad visa threshold then you should have no problems getting the visa approved.
On the tax side of things, crypto can be a bit of a grey area, but the general consensus from Malaysian advisors I've worked with is that it would be taxable if you're holding your staked crypto in a Malaysian crypto exchange, however if its a foreign exchange or perhaps you're staking it directly on a DeFi platform / smart contract then this isn't Malaysian sourced thus non taxable
Thanks Andy appreciate the advise, I’ve sent an email to degen tax advisors with some questions I need help if they are something you can help with I would like to book an appointment with you.
Hi, Wonderfull video. I'm selling products on Amazon USA, through an USA LLC, and I supply myself from China. I'm a single member and manage the whole things by myself. Getting the DE RANTAU Visa in Malaysia, and live there for the next 2 years, will I be considered Malaysian sourced income taxable ? Or foreign ? All the top decision of my business will be made on my desk in my room in KLCC. Thanks a bunch for your feedback
Hi Tim thanks for the kind words. This is potentially a grey area and can get quite subjective in absence of clear rules regarding online businesses, so generally we just need to piece together as many of the facts as possible and try to see it from Malaysia's point of view. If the authorities deem that the key value of the business is being controlled and managed from Malaysia, then they can consider it to be Malaysian sourced income. That being said, as its a US LLC with Amazon US as a marketplace, and Chinese supplies, there is an argument that a significant proportion of the value chain is actually outside of Malaysia. However, without external people making decisions, it might be hard to argue that there is sufficient presence outside of Malaysia to deem it foreign sourced. For example, Malaysia might ask - if you did not do any work in Malaysia, could the business continue to function, or is it crucial that you work on it to maintain it? In which case, they have a strong argument that its Malaysian sourced income. Whereas, if it could run by itself to a certain extent, requiring perhaps a light touch from you now and again, then it gives you a stronger argument that its foreign sourced.
@@WorldTaxAndy Thank you so much for your prompt answer and all details. Any advice on which taxes advisor I need to contact to clarify and secure this ?
or can I contact you offline ? Any emails ?
@@Tim1919-oi9ju Hi Tim you can reach me at www.degenwealth.com or email advisers@degenwealth.com
very useful. are you available for consultation, and how may we reach you please?
Hi, feel free to reach out at either of the following:
- Calendly: calendly.com/worldtaxandy
- Company email: advisers@degenwealth.com
- Website: www.degenwealth.com
If i am employeed in another country already which allow me to work remote, and i get freelance visa in malaysia. Am i going to pay tax in malaysia or in the country which i am coming from and employed ?
Hi, if you're a Malaysian tax resident (by spending > 182 days in Malaysia in the year) then technically you should file a Malaysian tax return.
However, if your employer is withholding taxes in their country, then you would generally not pay taxes in Malaysia IF there is a double tax treaty agreement between Malaysia and that country. These agreements basically prevent you from being taxed twice on the same income.
Let's say your employer is in Spain - and they are withholding Spanish income taxes on your salary. Malaysia & Spain have a Double Tax Treaty in place, meaning that your income would not be taxed twice - you would essentially be given a 'credit' for tax paid when you go to file your Malaysian return.
However this is a complex area of international tax law and every situation is unique so note this is general advice.
@@WorldTaxAndy is there any double tax treaty between pakistan and malaysia ? How to check this?
Yes phl.hasil.gov.my/pdf/pdfam/Pakistan.pdf
You can read this for the specifics, but this will generally mean that you will be protected from double taxation.
@@WorldTaxAndy thank you so much you are life saver ❤️
Just to let know I will not be going there ever again because it's DISGUSTING JUST ROBBING TOURISTS
I JUST PAYED A THE HILTON ..BYE BYE MALAYSIA FOR ME.
This advice seems out of date. The PWC Tax Summary for Malaysia contradicts most things covered for 2024.
Wow. What are the key differences based on your insights?
Malaysia’s territorial tax system is no longer.
Have you got any related links please?
Great video thanks. I have one question: i m a freelance serving multiple clients from different countries. You can also call me contractor and i sell consulting services in blockchain sector an bussiness related services. All contracts are signed online through docusign so i should consider my source of income from Malaysia. So can you make a video about the amount of taxes to pay?
Hi, thanks for the kind words. If you're a tax resident of Malaysia then yes you'd likely have to consider this Malay sourced income and pay taxes accordingly. I've put the personal income tax rates below, but I will make a video to cover this in more detail later:
For income up to MYR 5,000, the tax rate is 0%.
Incomes between MYR 5,001 and MYR 20,000 are taxed at 1% on the amount exceeding MYR 5,000.
Incomes between MYR 20,001 and MYR 35,000 are taxed at 3% on the amount exceeding MYR 20,000, plus a fixed amount.
Income between MYR 35,001 and MYR 50,000 is taxed at 6% on the excess over MYR 35,000.
Income between MYR 50,001 and MYR 70,000 is taxed at 11% on the excess over MYR 50,000.
Income between MYR 70,001 and MYR 100,000 is taxed at 19% on the excess over MYR 70,000.
Income between MYR 100,001 and MYR 400,000 is taxed at 25% on the excess over MYR 100,000.
Income between MYR 400,001 and MYR 600,000 is taxed at 26% on the excess over MYR 400,000.
Income between MYR 600,001 and MYR 2,000,000 is taxed at 28% on the excess over MYR 600,000.
Incomes exceeding MYR 2,000,000 are taxed at 30% on the excess over MYR 2,000,000
@@WorldTaxAndy thanks for the complete answer. They are quite high but I don't understand why the tax territorial principle is not apply. If i am rax resident in Malta and my company is established in Georgia or Ireland i dont have to pay tax in Malta since the income is made by my company in Ireland or Georgia
@@unpalumpa5143 In the case where its a foreign company then this is different. In the case where you're purely freelance and working in Malaysia as a freelancer, then Malaysia can claim this is local sourced income. However, if your Irish company is the company which deals with clients, invoices etc and receives the income, then this is not Malay sourced income.
@@WorldTaxAndy very clear thanks. U solve a big doubt