Tax regimes for individuals: Malaysia

Preferential and special regimes in 27 countries for people who relocate, work for themselves, invest or draw a pension. Conditions, time limits and the legal basis for each.

Regimes: 8

Returning Expert Programme (REP): 15% on employment income

Returning Expert Programme (REP) — Part XV, Schedule 1, Income Tax Act 1967

OpenFor people relocating

Flat 15% on chargeable employment income instead of the progressive scale up to 30%.

Details

Who: Malaysian citizens who are experts living and working abroad and had no employment income in Malaysia for at least 36 consecutive months before applying; the programme is run by TalentCorp.
How it works: An approved individual may choose a flat 15% rate on chargeable employment income in Malaysia instead of the 0–30% scale for 5 consecutive years of assessment. Applications close on 31 December 2027; after approval there are 2 years to return and start work.
Duration: 5 consecutive years of assessment — starting in the year of return or the following year (your choice).
How to opt in: Apply to TalentCorp while still living and working abroad, by 31 December 2027; after returning, obtain the return-date letter (SATK) from TalentCorp and give it to your employer, who then withholds tax at 15%.
Limits and risks: Malaysian citizens only, once in a lifetime; only employment income from a person resident in Malaysia (other income at scale rates); no bond or outstanding scholarship debt with the government. At modest incomes the scale is cheaper, so the rate is optional.
Legal basis: Income Tax Act 1967, Schedule 1, Part XV; P.U.(A) 151/2012 as amended by P.U.(A) 147/2021 and P.U.(A) 45/2024; LHDN Public Ruling No. 1/2026 (16.03.2026), paras 5–6
Checked: November 10, 2026

15% for non-citizen C-Suite executives of approved companies

Special income tax rate for a resident non-citizen holding a C-Suite position in an approved company — Part XVIII, Schedule 1, Income Tax Act 1967 (P.U.(A) 242/2023; Global Services Hub incentive)

OpenFor people relocating

Flat 15% on chargeable income.

Details

Who: Non-citizens who are Malaysian tax residents in a key (C-Suite) position — CEO, CFO and similar — in a company granted an incentive by MIDA: the business relocation incentive (applications up to 31.12.2024) or the Global Services Hub incentive.
How it works: Flat 15% on chargeable income instead of the 0–30% scale. Under MIDA's relocation guideline: 5 consecutive years of assessment, up to 5 individuals per company, basic salary of at least RM25,000 a month, resident in every year. The Act (Part XVIII) allows a rate of 'not more than 20%'; the details are in the Minister's rules.
Duration: 5 consecutive years of assessment (relocation incentive); for the Global Services Hub — as set in MIDA's letter.
How to opt in: The employer company applies on MIDA's InvestMalaysia portal; it then submits MIDA's endorsement letter to LHDN and withholds tax at 15%.
Limits and risks: Only through the company's incentive; lost for any year you are not resident; the relocation route closed to new applications from 1 January 2025.
Legal basis: Income Tax Act 1967, Schedule 1, Part XVIII; P.U.(A) 242/2023; MIDA Guidelines for the Special Tax Incentive (Relocation) 11.12.2023, paras 5, 7.2, 8; MIDA Process Flow for C-Suite under GSH (20.03.2025)
Checked: November 10, 2026

15% for knowledge workers in specified regions (Johor)

Knowledge worker in a specified region — Part XIV, Schedule 1, Income Tax Act 1967 (Iskandar Malaysia; Johor-Singapore Special Economic Zone)

OpenFor employees

Flat 15% on employment income in the zone.

Details

Who: Qualified knowledge workers residing in a specified region and employed by a company carrying on a qualified activity there (Iskandar Malaysia; from 2025 the Johor-Singapore Special Economic Zone).
How it works: Chargeable income from that employment is taxed at 15% instead of the 0–30% scale; the RM400 rebate still applies where income does not exceed RM35,000. For the Johor-Singapore SEZ, MIDA announced 15% for 10 years (from 1 January 2025); conditions and the application window are set by the Minister's rules.
Duration: Johor-Singapore SEZ: 10 years (as announced by MIDA).
How to opt in: Through the employer: you must be approved as a knowledge worker under the Minister's rules; the employer then withholds monthly tax at 15%.
Limits and risks: Only employment income from a qualifying company in the zone, and only while living in the zone; other income at scale rates.
Legal basis: Income Tax Act 1967, Schedule 1, Part XIV; LHDN Specification for MTD Computerized Calculation 2026, section D.b.4; MIDA, 'Johor-Singapore SEZ new incentive package' (08.01.2025)
Checked: November 10, 2026

Exemption of foreign income of resident individuals

Exemption of foreign-sourced income received in Malaysia by resident individuals — P.U.(A) 234/2022, as amended by P.U.(A) 451/2024

OpenFor people relocating

Foreign income taxed abroad is not taxed in Malaysia, even when remitted.

Details

Who: Individuals resident in Malaysia (citizens and foreigners) with income from abroad.
How it works: Tax is charged only on income received in Malaysia from abroad (s. 3 ITA); income kept abroad is not taxed. Foreign income remitted to Malaysia by a resident individual is exempt (except partnership income) if it was taxed in the source country.
Duration: For income received up to 31 December 2036.
How to opt in: No application: report the income as exempt in the annual return and keep proof of tax paid in the source country.
Limits and risks: Does not cover partnership income; foreign income not taxed at source is taxable when remitted; Malaysian-source income is taxed at the regular scale.
Legal basis: Income Tax Act 1967, s. 3; P.U.(A) 234/2022 as amended by P.U.(A) 451/2024; LHDN Guidelines on tax treatment of income received from abroad (amended 20.06.2024), para 5.2.2
Checked: November 10, 2026

Exemption for short employment of non-residents (up to 60 days)

Exemption of employment income of a non-resident for employment in Malaysia not exceeding 60 days — Schedule 6, para 21, Income Tax Act 1967

OpenFor employees

Income from up to 60 days of work is free of Malaysian tax.

Details

Who: Non-residents working in Malaysia for no more than 60 days in a calendar year (or a continuous period of up to 60 days spanning two years).
How it works: Employment income for work in Malaysia is exempt if the total period of employment does not exceed 60 days and the person is not resident for that year.
How to opt in: Automatic when the conditions are met; keep proof of working days (passport stamps, timesheets).
Limits and risks: Non-residents only; above 60 days all such income is taxed at 30% (or under a treaty); para 22 excludes certain employments (see the Act).
Legal basis: Income Tax Act 1967, Schedule 6, paras 21–22; LHDN Public Ruling No. 2/2026, para 4.6.1
Checked: November 10, 2026

Exemption of Malaysian pensions

Exemption of pensions derived from Malaysia — Schedule 6, para 30, Income Tax Act 1967

OpenFor pensioners

Pension for work in Malaysia is tax-free.

Details

Who: Pensioners receiving a pension from Malaysia for former employment in Malaysia, paid on reaching 55, the compulsory retirement age, or on retirement due to ill-health.
How it works: Such a pension is fully exempt; where it is not paid under a written law, it must come from an approved fund or scheme. If there are several pensions, only the highest is exempt.
How to opt in: No application: report the pension as exempt income in the return.
Limits and risks: Only Malaysian pensions for work in Malaysia; only the highest of several pensions is exempt; foreign pensions follow the foreign-income rules.
Legal basis: Income Tax Act 1967, Schedule 6, para 30
Checked: November 10, 2026

Dividends: tax-free up to RM100,000, 2% above

Single-tier dividends: exemption up to RM100,000 and 2% rate on the excess — Schedule 6, para 12B(2), and Schedule 1, Part XXII, Income Tax Act 1967

OpenFor investors

0% on dividends up to RM100,000, 2% above.

Details

Who: Individuals receiving dividends from companies, derived from Malaysia (single-tier system).
How it works: Dividends up to RM100,000 a year are disregarded in chargeable income; the excess over RM100,000 is taxed at a separate 2% rate, not at the 0–30% scale.
How to opt in: Automatic; report dividends above RM100,000 in the annual return.
Limits and risks: Only dividends derived from Malaysia; foreign dividends follow the foreign-income rules.
Legal basis: Income Tax Act 1967, Schedule 6, para 12B(2); Schedule 1, Part XXII
Checked: November 10, 2026

Exemption for non-citizen employees of regional headquarters (OHQ, RO, IPC, RDC, TMC)

Exemption of non-citizen employees of OHQ, RO, IPC, RDC and TMC companies on employment exercised outside Malaysia — P.U.(A) 382/2003, P.U.(A) 101/2008, P.U.(A) 184/2012

For employees

Income for work done abroad is free of Malaysian tax.

Details

Who: Non-citizens employed by a company with Operational Headquarters (OHQ), Regional Office (RO), International Procurement Centre (IPC), Regional Distribution Centre (RDC) or Treasury Management Centre (TMC) status.
How it works: Income from employment with such a company for work exercised outside Malaysia is exempt; income for work in Malaysia is taxed normally.
How to opt in: Through the employer: the company must hold the relevant status; split working days in Malaysia and abroad in the return.
Limits and risks: Non-citizens only, and only for work outside Malaysia; whether the status is still granted to new companies has not been checked.
Legal basis: P.U.(A) 382/2003; P.U.(A) 101/2008; P.U.(A) 184/2012; LHDN Public Ruling No. 2/2026, para 8
Checked: November 10, 2026

The catalogue describes general conditions. Whether a regime fits you depends on your circumstances and the tax authority's decision.