Below you'll find useful information about money and tax in Malaysia.
Your salary is subject to Malaysian tax regulations so it is your responsibility to familiarise yourself with these. You will need to submit a self-assessment tax return at the end of each year and at the end of the contract. In order to be considered a resident for tax purposes (and therefore pay a lower rate of income tax), the basic requirement is for you to be physically present in Malaysia for at least 182 days in a calendar year.
When you join the project, tax at the non-resident rate (currently 26%) will be deducted from your salary. If you join the project before the end of June 2014, when you submit your tax return in April 2015 for the 2014 tax year, you should be eligible for a tax rebate provided you gained tax resident status in 2014. If you join the project after 20 July 2014, you will still need to submit a tax return in April 2015, but you will not achieve tax residency until July 2015 at the earliest. Provided you achieve tax residency in 2014 and/or 2015, you will be eligible for a tax rebate when your tax is cleared at the end of the project. Please note that in accordance with new tax laws in Malaysia, we cannot deduct resident rate tax from your salary until you become tax resident. (The Malaysian tax year runs from 1 January to 31 December).
Disclaimer: Please note it is up to you do what is necessary to achieve tax residency. Tax residency rules are complicated. The British Council does its best to help you understand them but cannot be responsible for any errors or omissions. As such, the above information is for guidance only. Once you arrive in Malaysia, you are strongly advised to check with your local tax office to ensure your travel plans will not compromise your achievement of tax residency. The most up-to-date information on individual resident and non-resident tax is provided by the Malaysian Inland Revenue: www.hasil.gov.my/index.php (you can select for English)
NEW: Tax information for mentors arriving in 2015
This information is for mentors joining ELTDP between 1 Jan and 1 April 2015.
Initially, i.e. until you become resident for tax purposes, tax will be deducted from your monthly salary at the non-resident rate, ie currently 26%.
In order to become tax resident, you will need to be physically in Malaysia for 182 days (non-consecutive). It is also our understanding that being in Malaysia for 182 days still allows you to leave the country for a maximum of 14 days during that period, though we strongly advise you to check this with your local tax office before leaving the country (eg to go on holiday) so as not to jeopardise your tax residence qualification.
We will send you an in/out log approximately 6 months after your arrival date which you will fill out to record days you have spent in Malaysia and outside the country (e.g. on holiday). Once you have achieved 182 days in-country (as evidenced by the in/out log), you send the log back to the Kuching office and we change your tax code so that you have resident rate tax deducted from your salary from the start of the following month. The amount of tax you will have to pay as a tax resident is approximately 15-16%.
Once you become tax resident, you will be entitled to a tax rebate on the amount which you have overpaid when you were initially classed as a non-resident.
Don’t worry if this is a bit complicated. We will explain more during your induction and you will also have a chance to ask questions.
Disclaimer: Tax laws are complicated in Malaysia, as in all countries. The British Council does its best to help staff understand these laws as they apply to them, but cannot be held responsible for any incorrect information.
You will need access to funds to tide you over for the initial few weeks of your appointment.
Although accommodation and some meal costs will be paid directly by the British Council before and during the induction, you will need to pay for some meals and there will be other immediate costs such as taxi from the airport (RM30), money to open a bank account (RM 260), key deposit at the hotel (RM100), and other incidental costs such as money to use internet cafes and explore the city. You will want to buy a a pre-paid or post-paid broadband USB dongle for your laptop (you may need a deposit of around RM100 to start you up, depending on the company you choose) and you may also need to bring cash to pay for excess baggage if it has not been prebooked. You will be able to claim some of this money back later (eg subsistence, taxi fare, excess baggage as part of your baggage allowance), but you will not receive this money until approximately 5 weeks after your arrival.
After the induction, you may have to move into a small hotel which the British Council cannot pay direct so you will need to cover the cost of this and claim later (RM200-300/night).You will be able to claim up to a total of 14 nights accommodation and subsistence; some of these nights will be taken during the induction and the remaining nights will be at your placement. All claims are against original receipts (don’t lose them!) and claims take up to a month to process once they have been submitted.
You will need to secure accommodation and will typically need to pay 2 months’ rent in advance plus a deposit of a month’s rent.
Under the terms of the contract, you will paid a settling in allowance at the start of your contract (please refer to your contract for more information). Please note, however, this will NOT be paid in cash - it will be deposited into your local account by the office but this can only happen once you have opened your account in your first week of the induction (we'll help with that). This cannot be an instant process and it can take up to TWO WEEKS (possibly a little longer if there are any public holidays).
Also, very importantly, please not that you will NOT receive your salary in the first month. Your first month’s salary will be paid along with your second month’s salary at the end of your second month of employment.
You can obtain cash in Malaysia by using an ATM card (check in advance with your bank that your card will work in Malaysia), by exchanging cash or traveller’s cheques, etc.
Bringing money in and out of Malaysia
DISCLAIMER REMINDER! This information is very much open to change without notice. The British Council takes no responsibility for the quality of the information provided here. How you arrange your money is your own responsibility.
Bringing money in
Please be advised that there are some limits to the amount of cash you can bring into Malaysia. Unfortunately, the website for the Malaysian Customs and Immigration regarding foreign exchange isn't currently working. In the meantime, the best info that we can find through online searches is found here
. Bear in mind that it is external and hasn't been verified.
Taking money out
We have contacted the Public Bank (where will help you to open an account) who told us the following information. To wire money as a telegraphic transfer to your home country (during or at the end of your contract), there is no upper limit to the amount so long as you have a valid work visa (which you will). The fee quoted to do that was RM10 if you have a work pass and RM30 if you do not. You'll need your passport and bank book to do this over the counter. The time it would take will depend on the receiving bank, but should be a couple of days. There may also be a fee charged by your home bank to receive the funds. You can also transfer money using Public Bank's online service but the limit is RM10,000 and there is a flat fee of RM30.
You might also want to check here for the current details on the upper limits on the amount you can carry out on your person.
Bear in mind that the current rules for the Employee Provident Fund (EPF - details are in your contract) mean that the payout from this fund can be wired directly to your account in some overseas countries. If not, it will be paid to you by cheque or directly into your Malaysian bank account before you complete your contract so you can transfer it yourself.
Special regulations for US citizens opening Malaysian bank accounts (1)
Following the introduction of new regulations imposed on all Malaysian Banks ( Local or Foreign ) beginning 1st July 2014 , all U.S. Citizens/PR/Address holders will have to provide certain documents in order to register for a Malaysian Bank Account. These are :
- A signed employment letter from your employer (we will supply you with this)
- TIN ( U.S. Taxpayer Identification Number )
- Approved work permit from Malaysia
This will affect how we make payments to you in the first few months after you take up your post, since, by law, your salary has to be paid into a bank account in your name and it takes approximately 6 weeks after submission of the required documentation to obtain your work pass.
Special regulations for US citizens opening Malaysian bank accounts (2)
Payment of your monthly salary
There are 2 options to deal with this problem:
Option 1 : Have your Nett salary ( Gross salary less tax ) paid directly into your U.S Bank Account provided by you. You will have to wait for clearance after the usual payday which is 27th of each month ( this may take 3-5 days or more to clear ). British Council Malaysia will bear the telegraphic transfer charges to send to your salary to your overseas account. (Any charges incurred when your bank receives the salary and any charges you may incur to withdraw money are payable by you).
Option 2 : Have your nett salary withheld by British Council Malaysia and paid as a lump sum once you have a Malaysian Bank Account.
Settling in allowance and claims
You will still receive your Settling In Allowance ( direct cash-in within 10 days upon your arrival ), but your expense claims ( excess baggage, taxi, subsistence, hotel, vaccinations etc. ) cannot be paid until you have opened your Malaysian bank account.
We will decide with you how to make your initial salary payments and answer any questions you may have on this subject during the induction.