# Expatriate and Non-Resident Tax: the Flat 30% and the Escapes

> The flat non-resident rate, the 60-day employment exemption, the 15% knowledge-worker and Returning Expert rates, and how Employment Pass timing decides which one you get.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/taxation/expatriate-and-non-resident-tax

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The most expensive month in an expatriate assignment is usually the month of
arrival, and it costs nothing at the time. Land on 15 July and you are 12 days
short of the 182 needed for residence. Land on 15 June and you clear it. Same
package, same employer, and a difference of roughly a third of the year's tax
bill — because a non-resident individual pays a **flat 30% on the first
ringgit** with no reliefs at all.

## The flat rate

Schedule 1 Part I paragraph 1A charges income tax on the chargeable income of a
person other than a company **not resident** for the basis year at 30% on every
ringgit. There is no zero band, no progression, and no way into the s.46 relief
list or the s.6A rebates — both are drafted for an individual **resident for
the basis year**.

Other non-resident charges sit alongside it:

| Income of a non-resident individual | Rate | Authority |
| --- | --- | --- |
| Chargeable income generally, including employment | 30% | Sch 1 Part I para 1A |
| Interest derived from Malaysia | 15% of gross | Sch 1 Part II item 1 |
| Royalty derived from Malaysia | 10% of gross | Sch 1 Part II item 2 |
| Public entertainer's remuneration for services in Malaysia | 15% of gross | Sch 1 Part II item 3 |
| Section 4(f) gains or profits derived from Malaysia | 10% of gross | Sch 1 Part XIII |

## The 60-day exemption

Schedule 6 paragraph 21 exempts the income of an individual from an employment
**exercised by him in Malaysia**:

- for a period or periods together **not exceeding sixty days** in the basis
  year; or
- for a **continuous period not exceeding sixty days** that overlaps the basis
  years for two successive years of assessment; or
- for such a continuous overlapping period plus other periods which together do
  not exceed sixty days,

provided he **is not resident** for that basis year, or for each of those basis
years.

Two features are routinely misread.

**It is a cliff, not a threshold.** Paragraph 22(a) disapplies the exemption
altogether where the individual has employment income derived from Malaysia for
periods amounting in all to **more than sixty days** in the relevant period.
Day 61 does not tax one day — it taxes all 61, at 30%.

**Public entertainers are carved out.** Paragraph 22(b) excludes employment
income of a public entertainer unless it is paid out of the public funds of a
foreign government. A visiting performer is taxed under Schedule 1 Part II at
15% of gross from the first day.

The exemption also requires non-residence. An individual who becomes resident —
including retrospectively, through the s.7(1)(b) link — loses it.

## How Employment Pass timing decides residence

Residence is a day count under s.7(1), reassessed for every basis year. The
Employment Pass grants the right to work; it grants nothing under the Income
Tax Act.

| Arrival date, continuous stay to 31 December | Days present | Position |
| --- | --- | --- |
| On or before 2 July | 182 or more | Resident under s.7(1)(a) |
| After 2 July | fewer than 182 | Depends on s.7(1)(b) |

For a mid-year arrival everything turns on the second test. Section 7(1)(b)
makes the short arrival year resident if that period is **linked by or to a
period of 182 or more consecutive days** throughout which the individual is in
Malaysia in the basis year for the immediately following year of assessment.

So a November arrival on a two-year posting is usually resident for the arrival
year — but only once the following year has actually delivered 182 consecutive
days. The requirement is **consecutive**, unlike the aggregate count in test
one, and a home-leave trip can break it. The proviso to s.7(1)(b) rescues
absences connected with service in Malaysia, absences for ill-health of the
individual or an immediate family member, and social visits **not exceeding
fourteen days in the aggregate**, so long as the individual is in Malaysia
immediately before and after.

The mirror image catches departures. An assignment ending in March leaves a
short final year that can borrow residence backwards from the previous year's
182 consecutive days — Public Ruling 11/2017 Example 5 does exactly this.
Example 6 refuses it where the individual left in December and never returned,
because the absence was not temporary.

Two further routes matter for long assignments. Section 7(1)(c) gives residence
on **90 days or more** in the year where the individual was resident or present
for 90 days or more in **three of the four preceding** years — the pattern of a
regional executive based elsewhere but in Malaysia every quarter. Section
7(1)(d) makes a year resident with **no presence at all** where the individual
is resident for the following year and was resident for each of the three
preceding years.

## The 15% rates

| Regime | Rate | Authority |
| --- | --- | --- |
| Knowledge worker residing in a specified region, employed by a person carrying on a qualified activity there | 15% | Sch 1 Part XIV |
| Approved individual under the Returning Expert Programme, employed by a person in Malaysia | 15% | Sch 1 Part XV |
| Resident non-citizen exercising employment in a company carrying on a qualifying activity under an approved incentive scheme | **not more than** 20% | Sch 1 Part XVIII |

Parts XIV and XV both leave the definitions — who is a knowledge worker, what
is a qualified activity, which region is specified, which years of assessment
are covered — to rules made by the Minister. The rate is statutory; eligibility
is not, and it must be checked against the operative rules for the year rather
than against a summary.

Part XVIII is a ceiling, not a rate. It caps the charge on a resident
non-citizen in an approved-scheme role at 20%, with the actual rate prescribed
scheme by scheme.

Where Part XIV or XV applies, note the proviso to s.6A(2): the RM35,000
chargeable-income ceiling for the RM400 rebate is tested against the
individual's chargeable income **from all sources**, not just the concessionary
employment.

## Which form

| Situation | Form | Deadline |
| --- | --- | --- |
| Non-resident individual | M | 30 April, or 30 June with business income |
| Non-resident knowledge worker | MT | 30 April, or 30 June with business income |
| Resident knowledge worker, expert, or non-citizen in a key position | BT | 30 April, or 30 June with business income |
| Resident expatriate, ordinary case, no business income | BE | 30 April |

All of these carry a 15-day e-Filing extension. Before departure the employer
must lodge **CP21 at least 30 days before** the employee leaves Malaysia, and
tax clearance governs the release of final monies.

## Common mistakes

- **Reading 30% as a foreigner rate.** It is a non-residence rate. A resident
  expatriate is taxed identically to a Malaysian, reliefs included.
- **Treating 60 days as a free allowance.** Paragraph 22 removes the exemption
  retrospectively and entirely once the count passes 60.
- **Counting the linking-year days as aggregate.** Section 7(1)(b) needs 182
  **consecutive** days in the adjacent year. Test one's aggregate count does
  not carry across.
- **Fifteen days of home leave.** The social-visit allowance is fourteen days
  **in total** for the year. The fifteenth breaks the consecutive block and
  with it the linking claim.
- **Locking PCB at 30% for the whole arrival year.** Where the s.7(1)(b) link
  will be satisfied, the employee is resident for that year and the
  over-deduction is recoverable — but only by filing a return.
- **Assuming the 15% knowledge-worker rate follows the job title.** It follows
  the Ministerial rules on region, activity and approval. Nothing about a
  senior technical role qualifies on its own.

## What's next

Settle the residence question first, then confirm the form and deadline for the
year you are filing, and check the relief list if you turn out to be resident
after all.

## Sources

- Income Tax Act 1967 (Act 53), reprint of 21 May 2024 — Schedule 1 Parts I, II, XIII, XIV, XV, XVIII and Schedule 6 paras 21 and 22 — https://www.hasil.gov.my/wp-content/uploads/20240521-akta-cukai-pendapatan-1967-akta-53.pdf (Attorney General's Chambers)
- Ketetapan Umum No. 11/2017 — Taraf Mastautin Individu — https://www.hasil.gov.my/wp-content/uploads/KU_11_2017.pdf (Lembaga Hasil Dalam Negeri Malaysia)
- Program Memfail Borang Nyata (BN) Bagi Tahun 2026 — https://www.hasil.gov.my/wp-content/uploads/program-memfail-bn-bagi-tahun-2026.pdf (Lembaga Hasil Dalam Negeri Malaysia)
- Taraf Mastautin — Individu — https://www.hasil.gov.my/individu/taraf-mastautin/ (Lembaga Hasil Dalam Negeri Malaysia)

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