Tax residence in Malaysia for Pakistani taxpayers

Malaysia treats you as resident if you spend 182 days or more there in a calendar year, with any part of a day counting as a full day. Fewer days can be enough: if they are linked to at least 182 consecutive days in Malaysia within the previous or the next calendar year, if you have spent 90 days or more there in earlier years, or if you were resident in the three previous years and will be in the next. Malaysia taxes foreign income only when it is received in Malaysia. Pakistan counts its own tax year of 1 July – 30 June; where both countries claim you, Art. 4(2) of the 1982 Pakistan–Malaysia Agreement decides.

Check your status: Pakistan and Malaysia

Free, no sign-up, about 3 minutes. Conclusion under Pakistan's Income Tax Ordinance, 2001, compared with the law of Malaysia and the tax treaty.

When Malaysia treats you as a tax resident

Malaysia counts days in the calendar year (an individual's basis year), and the threshold is 182 days (not 183): 182 days or more make you resident. Any part of a day in Malaysia counts as a full day, so the days of arrival and departure count too. Citizenship, visa or owning a home do not matter for this test.

Malaysia links years together: even fewer than 182 days in the selected year make you resident if those days are linked to a period of at least 182 consecutive days in Malaysia that lies entirely within the previous or the next calendar year (for example, you were in Malaysia from 1 March to 31 December of the previous year and stayed on into the selected year). A stay that merely crosses 31 December is not enough: from September to April, neither year contains 182 consecutive days. Business trips for your Malaysian job, medical treatment (yours or a close relative's) and social visits of up to 14 days in total do not break the period if you were in Malaysia before and after the trip; a longer holiday abroad does. The 14-day allowance for social visits covers both periods together.

The second rule is for people who come to Malaysia year after year: 90 days or more in the selected year make you resident if, in any three of the four preceding years, you were resident in Malaysia or spent at least 90 days there. The criteria can be combined — for example, two years of residence and one year with 90 days.

The third rule keeps your status for a year in which you were hardly or not at all in Malaysia (for example, studying or working abroad for a long time): you are resident if you were resident in each of the three preceding years and will be resident in the following year. So your final status for such a year is known only after the following year ends.

For Malaysian citizens in the public service (or with a statutory authority) who spent the selected year abroad because of that work or on study fully paid by the employer, a special rule applies: they are treated as resident.

You spent 182 days or more in Malaysia in the calendar year (counting every part day) — you are a Malaysian tax resident for that year (s. 7(1)(a) ITA 1967). Malaysia taxes income from Malaysian sources at progressive rates from 0 to 30%; foreign income only if it is remitted to Malaysia, and for individuals it is exempt until 31 December 2036 if it was taxed in the country of source.
Fewer than 182 days in the selected year, but they are linked to a period of at least 182 consecutive days in Malaysia within the previous or the next calendar year — you are a Malaysian resident for this year (s. 7(1)(b) ITA 1967). The conclusion is probable: check that those 182 consecutive days really fall within one adjacent year and that every trip abroad was a permitted temporary absence (social visits — no more than 14 days in total across both periods).
You spent 90 days or more in Malaysia, and in three of the four preceding years you were resident there or spent at least 90 days there — you are a Malaysian resident for this year (s. 7(1)(c) ITA 1967). Back up your answer about the earlier years with documents (passport stamps, LHDN statements).
You were a Malaysian resident in each of the three preceding years and are (or will be) resident in the following year — you are resident for the selected year too, even if you were hardly in Malaysia (s. 7(1)(d) ITA 1967). The conclusion depends on your status in the following year: if you do not become resident then, the rule does not apply.
As a Malaysian citizen in the public service (or with a statutory authority) who was abroad because of that work or on study fully paid by the employer, you are treated as a Malaysian resident for this year (s. 7(1B) ITA 1967).

When you are a nonresident

You meet none of the criteria of s. 7 ITA 1967 — you are not a Malaysian resident for this year. Malaysia may tax only your Malaysian-source income, at a flat 30% without reliefs (certain types through withholding tax at source).
Your answers suggest you are probably not a Malaysian resident, but you answered «Not sure» to one of the questions (continuous period, earlier years or the following year). Count your days in Malaysia for the selected, earlier and following years — any of the criteria in s. 7(1)(b)–(d) can make you resident.

Where the rules of Malaysia clash with Pakistani tax rules

Collision: 182 days in Malaysia while Pakistan also treats you as resident. Malaysia treats you as resident because you spent 182 days or more there in the calendar year; Pakistan may treat you as resident with 183 days in its own tax year, as a government employee posted abroad (s. 82(c)) or, if you are a citizen, under s. 82(d). Art. 4(2) of the Pakistan–Malaysia Agreement decides: a permanent home in only one country — that country; a home in both — the centre of vital interests; if that cannot be determined or you have no permanent home in either country — habitual abode; then nationality; then mutual agreement. Under s. 107 the treaty prevails over the Ordinance.
Collision: Malaysia can make you resident with fewer than 182 days. Malaysia may treat you as resident for a year in which you spent fewer than 182 days there: if those days are linked to at least 182 consecutive days in Malaysia within the previous or the next year (s. 7(1)(b)), if you have come for 90 days or more in earlier years (s. 7(1)(c)), if you were resident before and after that year (s. 7(1)(d)), or as a Malaysian civil servant posted abroad (s. 7(1B)). The Ordinance has no such rules, but a Pakistani citizen who is not present in any other country for more than 182 days in the Pakistani tax year stays resident in Pakistan under s. 82(d). If both countries treat you as resident, Art. 4(2) of the Agreement decides: permanent home first, then centre of vital interests and habitual abode — one year's days are not decisive.
Collision: Pakistani citizen resident in both countries. Under s. 82(d) of the Ordinance a Pakistani citizen is resident in Pakistan if he or she is not present in any other country for more than 182 days in the tax year (1 July – 30 June) or is not a resident taxpayer of any other country. Because Malaysia counts the calendar year and can make you resident with fewer than 182 days, you can be resident in Malaysia while your days there in a Pakistani tax year stay at 182 or fewer — typically in the year of arrival or departure. Then Art. 4(2) of the Pakistan–Malaysia Agreement decides: permanent home; if a home in both — centre of vital interests; if that cannot be determined or you have no permanent home in either — habitual abode; then nationality; then mutual agreement.

What else to know

Which treaty applies: the Pakistan–Malaysia Agreement (1982). The Agreement between the Government of Malaysia and the Government of the Islamic Republic of Pakistan, signed at Islamabad on 29 May 1982, has effect for income arising on or after 1 January 1980 (Art. 30(2)). Malaysia's tax authority dates its entry into force to 9 November 1982 (the cover of FBR's copy gives 12 April 1983). It is covered by the MLI (in force for Pakistan from 1 April 2021, for Malaysia from 1 June 2021), which adds a principal purpose test and the MLI's mutual agreement procedure; Arts. 4 and 23 are unchanged. Residence tie-breaker: Art. 4(2) — permanent home, centre of vital interests, habitual abode, nationality, then mutual agreement. Independent personal services: Art. 14; employment: Art. 15 (183 days in the fiscal year concerned); directors' fees: Art. 16; pensions: Art. 18; government service: Art. 19; relief: Art. 23 — credit in both countries; limitation of relief for income taxed only when remitted: Art. 24. Under s. 107 of the Ordinance the treaty prevails in giving relief.
Different counting periods: 1 July – 30 June and the calendar year. Pakistan counts days in its tax year (1 July – 30 June) and needs 183 days. Malaysia counts 182 days or more in the calendar year (also in a leap year), and any part of a day in Malaysia counts as a full day, so arrival and departure days count; it also looks at a period of 182 or more consecutive days within the previous or the next year to which your days are linked and at your earlier years. A full calendar year in Malaysia therefore falls into two Pakistani tax years, with fewer than 183 days in Malaysia in each. The treaty's 183-day employment test (Art. 15(2)(a)) uses «the fiscal year concerned», a term the Agreement does not define. Keep a day count for each of these periods.
Malaysia does not tax foreign income that is not received in Malaysia. Even a Malaysian resident pays Malaysian tax only on income arising in Malaysia and on foreign income received (remitted) in Malaysia; foreign income of a resident individual received in Malaysia by 31 December 2036 is exempt if it was taxed in the country of source. Pakistan taxes its residents on worldwide income: if you are a treaty resident of Pakistan, your Malaysian salary and other Malaysian income are taxed in Pakistan too, with relief for the Malaysian tax (Art. 23(2); ss. 102–103). If you are a treaty resident of Malaysia and the Agreement exempts Pakistani income or reduces Pakistani tax on it, Pakistan gives that relief only on the amount remitted to or received in Malaysia (Art. 24).
Working in Malaysia while resident in Pakistan. Pay for work physically done in Malaysia is Malaysian-source income; a non-resident of Malaysia pays 30% on it unless the work in the basis year lasted no more than 60 days (para 21 Sch. 6 ITA 1967). If you are a treaty resident of Pakistan, Malaysia does not tax the pay when all three conditions of Art. 15(2) are met: no more than 183 days in Malaysia in the fiscal year concerned, an employer that is not resident in Malaysia, and pay not directly deductible from the income of the employer's permanent establishment in Malaysia. In Pakistan, salary earned in Malaysia is exempt if you have paid Malaysian tax on it — tax withheld by the employer and paid to LHDN counts (s. 102); otherwise Pakistan credits the Malaysian tax, up to the Pakistani tax on that income (Art. 23(2); s. 103).
Non-resident of Malaysia: withholding rates and treaty limits. As a non-resident you pay Malaysian tax only on Malaysian-source income, partly through withholding by the payer: interest 15%, royalties 10%, fees for technical and consultancy services performed in Malaysia 10%, other income under s. 4(f) 10%, public entertainers 15%. If you are a treaty resident of Pakistan and the beneficial owner, the Agreement caps the Malaysian tax on interest and on royalties at 15% (Arts. 11(2), 12(2)) — no lower than the domestic rates — and exempts approved industrial royalties (Art. 12(3)). Directors' fees from a Malaysian company are taxable only in Malaysia (Art. 16). A sale of Malaysian real property by a foreigner without permanent resident status bears RPGT of 30% within 5 years of ownership and 10% from the 6th year; the Agreement lets Malaysia tax such gains (Art. 13(1)). If you are resident in Pakistan, Pakistan credits the Malaysian tax (Art. 23(2); s. 103).
How double tax is relieved between Pakistan and Malaysia. If you are a treaty resident of Pakistan, Malaysian tax on Malaysian-source income taxed in both countries is credited against Pakistani tax, up to the proportion of Pakistani tax which that income bears to your entire income chargeable to Pakistani tax (Art. 23(2)); under s. 103 the credit is computed separately for each head of income, unused credit is lost, and the Malaysian tax must be paid within two years after the end of the Pakistani tax year. If you are a treaty resident of Malaysia, Pakistani tax on Pakistani-source income is credited against Malaysian tax on that income (Art. 23(3)). Tax reduced or exempted under either country's tax incentive programme counts as payable for the credit (Art. 23(4)). To prove tax paid in Pakistan, ask the Competent Authority for a certificate of tax paid (rule 19B). A case of taxation not in accordance with the Agreement can be presented to the competent authority within three years from the first notification of the action (Art. 26).
Pakistani government posting to Malaysia. Federal and Provincial Government employees and officials posted abroad remain resident in Pakistan under s. 82(c). Under Art. 19(1) of the Agreement, remuneration paid by Pakistan, a political sub-division or a local authority for services rendered to it is taxable only in Pakistan — unless the services are rendered in Malaysia by a resident of Malaysia who is a Malaysian national or did not become resident there solely to render the services. A government pension is taxable only in Pakistan (Art. 19(2)).
Pensions after a move to Malaysia. Pensions, annuities and similar periodic payments after retirement for past employment are taxable only in the country where you are resident under the Agreement (Art. 18). A pension paid by Pakistan, a province or a local authority for services rendered to it stays taxable only in Pakistan (Art. 19(2)). Malaysia taxes foreign income only when it is received in Malaysia, and a resident individual's foreign income received there by 31 December 2036 is exempt if it was taxed in the country of source.
Residence under s. 7(1)(d) depends on the following year. You are a Malaysian resident under the rule that looks at the following year. If you do not become a Malaysian resident in the following year, your status for the selected year changes — check it once that year has ended. For the Agreement it matters whether Malaysian law treats you as resident, so until your status is confirmed Pakistan may not accept a Malaysian certificate of residence.
Year of moving: different years and Pakistani exemptions. Malaysia determines residence for each basis year (the calendar year); Pakistan for each tax year from 1 July to 30 June. Because the periods overlap only partly, a move can make you resident in both countries for part of the time. A Pakistani citizen who leaves Pakistan during a tax year and stays abroad for the rest of it is exempt in Pakistan on salary earned abroad in that year (s. 51(2)); a citizen who becomes resident again after four tax years of non-residence is exempt on foreign-source income in the year of return and the following year (s. 51(1)).
Certificates of residence. To use the Agreement in Pakistan as a resident of Malaysia, get a Malaysian certificate of tax residence from LHDN (Certificate of Residence, online through e-Residence). To use it in Malaysia as a resident of Pakistan, apply to the Competent Authority of Pakistan (FBR) for a certificate of residence — a separate application for each tax year (rule 19A). A non-resident who paid tax in Pakistan can ask for a certificate of tax paid to present to the Malaysian tax authority (rule 19B).

How dual residence is resolved

If both countries treat you as a resident, Art. 4(2) of the treaty applies: Agreement between the Government of Malaysia and the Government of the Islamic Republic of Pakistan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, with Final Protocol, signed at Islamabad on 29 May 1982. The tests are applied in order — permanent home, centre of vital interests, habitual abode, nationality, and finally mutual agreement between the tax authorities.

The treaty in detail: income, rates, the 183-day rule →

Terms you will come across in Malaysia

Income Tax Act 1967 (ITA): Malaysia's income tax law; residence of individuals — s. 7
basis year: for an individual, the calendar year for which residence is determined
LHDN: Inland Revenue Board of Malaysia
Certificate of Residence (e-Residence): Malaysian certificate of tax residence, issued by LHDN online
RPGT (Real Property Gains Tax): tax on gains from selling real property in Malaysia
PR 11/2017: LHDN public ruling on the residence status of individuals

Questions

Which tax treaty applies between Pakistan and Malaysia?

The Agreement signed at Islamabad on 29 May 1982, with effect for income arising from 1 January 1980, as modified by the MLI. Its tie-breaker for individuals, Art. 4(2), is unchanged: permanent home, centre of vital interests, habitual abode, nationality, then mutual agreement. Malaysia dates its entry into force to 9 November 1982; the cover of FBR's copy gives 12 April 1983.

How does Malaysia count 182 days?

The threshold is 182 days or more in the calendar year (also in a leap year), not 183. Any part of a day in Malaysia counts as a full day, so arrival and departure days count. Malaysia also looks at a period of 182 or more consecutive days within the previous or the next year to which your days are linked and at your earlier years, so you can be resident with fewer than 182 days.

I am sent to Kuala Lumpur for a few months. Does Malaysia tax my salary?

Not if the work in Malaysia lasted no more than 60 days in the year. Beyond that, as a treaty resident of Pakistan you are exempt in Malaysia only if Art. 15(2) applies: no more than 183 days in Malaysia in the fiscal year concerned, an employer not resident in Malaysia, and pay not deductible by its Malaysian permanent establishment. Otherwise a non-resident pays 30%, and Pakistan exempts the salary or credits the Malaysian tax.

Sources

Legislation and official guidance

s. 7(1) Income Tax Act 1967 (Act 53) — An individual is resident in Malaysia for a basis year (for individuals, the calendar year) if he or she: (a) is in Malaysia for 182 days or more in that year; (b) is there for fewer than 182 days, but that period is linked to another period of at least 182 consecutive days in Malaysia falling within the preceding or the following year (permitted temporary absences count towards both periods, and the 14-day allowance for social visits covers both together); (c) is there for 90 days or more in that year and, in each of any three of the four preceding years, was resident or was in Malaysia for 90 days or more; (d) is resident in the following year and was resident in each of the three preceding years.
Public Ruling LHDN No. 11/2017 «Residence Status of Individuals» (22.12.2017), paras 5–6 — Residence depends on physical presence, not on citizenship or a residence permit. Part of a day counts as a full day of presence (the days of arrival and departure count). LHDN's ruling gives examples for each of the criteria in s. 7(1)(a)–(d) and s. 7(1B).
s. 7(1)(b) ITA 1967 (temporary absences) — A continuous period is not broken by temporary absences, provided the person was in Malaysia immediately before and after them: (i) absences connected with service in Malaysia (official business, conferences, seminars, study abroad); (ii) absences owing to ill health of the person or of an immediate family member; (iii) social visits not exceeding 14 days in total.
s. 7(1B) ITA 1967; Public Ruling No. 11/2017, para 6.5 — A Malaysian citizen who works in the Malaysian public service or for a statutory authority is treated as resident for a year in which he or she was not in Malaysia because of service abroad in that post or study abroad fully paid by that employer. The rule does not cover employees of private companies or local staff hired abroad.
Income Tax (Exemption) (No. 5) Order 2022, P.U.(A) 234/2022, as amended by P.U.(A) 451/2024; LHDN Guidelines on income received from abroad (20 June 2024), paras 5.2.2.1–5.2.2.2 — Foreign income of a resident individual received (remitted in cash or electronically) in Malaysia from 1 January 2022 is exempt, except income connected with a partnership in Malaysia — provided the income was taxed in the country of source, or was not taxed there because of its tax system, a tax-free threshold or a tax incentive. P.U.(A) 451/2024 (in force from 1 January 2027) extended the exemption from 31 December 2026 to 31 December 2036.
s. 3 ITA 1967; LHDN «Who is taxable» — Tax is charged on income accruing in or derived from Malaysia and on income received in Malaysia from outside Malaysia. Residents pay at progressive rates and are entitled to personal reliefs (ss. 45A–49); non-residents pay a flat 30% without reliefs.
Agreement between the Government of Malaysia and the Government of the Islamic Republic of Pakistan (Islamabad, 29 May 1982), synthesised text with the MLI (FBR), Art. 30(2) — The Agreement enters into force upon the exchange of instruments of ratification and has effect for income arising on or after 1 January 1980. The MLI entered into force for Pakistan on 1 April 2021 and for Malaysia on 1 June 2021; the MLI's preamble, principal purpose test and mutual agreement procedure (Art. 16 MLI) apply. The authentic texts prevail.
LHDN — comprehensive double taxation agreements (Malaysia–Pakistan, Order P.U.(A) 369/1982) — LHDN's table of Malaysia's comprehensive double taxation agreements includes the Agreement with Pakistan signed on 29 May 1982 and in force from 9 November 1982 (Order P.U.(A) 369/1982), covered by the MLI.
Income Tax Ordinance, 2001, s. 107(2) — Subject to s. 109, a double taxation agreement and its implementing notification have effect notwithstanding anything in any other law, so far as they provide relief from tax under the Ordinance, determine the Pakistan-source income of non-residents, or provide for exchange of information.
Income Tax Ordinance, 2001, s. 82(a) — An individual is a resident individual for a tax year if present in Pakistan for a period of, or periods amounting in aggregate to, 183 days or more in the tax year (1 July – 30 June).
Art. 15(2) Pakistan–Malaysia Agreement (1982) — Remuneration of a resident of one State for employment exercised in the other State in any fiscal year is taxable only in the residence State if (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned, (b) the services are exercised for or on behalf of an employer who is not a resident of the other State, and (c) the remuneration is not directly deductible from the income of a permanent establishment which the employer has in the other State. The Agreement does not define «fiscal year».
Art. 4(2) Pakistan–Malaysia Agreement (1982) — Dual-resident individual: (a) resident of the State in which he has a permanent home available to him; if he has one in both States — the State with which his personal and economic relations are closer (centre of vital interests); (b) if that State cannot be determined, or if he has not a permanent home available to him in either State — the State in which he has an habitual abode; (c) habitual abode in both States or in neither — the State of which he is a national; (d) national of both or of neither — the competent authorities settle the question by mutual agreement.
Income Tax Ordinance, 2001, s. 82(d) (inserted by the Finance Act, 2022; FBR consolidated text amended up to 30.06.2026) — Resident individual: one who, being a citizen of Pakistan, is not present in any other country for more than one hundred and eighty-two days during the tax year or who is not a resident taxpayer of any other country.
Art. 24 Pakistan–Malaysia Agreement (1982) (limitation of relief) — Where the Agreement exempts income from sources in one State or reduces the tax on it, and the other State taxes that income by reference to the amount remitted to or received in it rather than the full amount, the exemption or reduction applies only to the amount so remitted or received; relief may be claimed later for amounts remitted afterwards.
Income Tax Ordinance, 2001, s. 102 — Foreign-source salary received by a resident individual is exempt if the individual has paid foreign income tax on it; tax is treated as paid if it was withheld by the employer and paid to the revenue authority of the country where the employment was exercised.
Income Tax Ordinance, 2001, s. 103 — A resident taxpayer gets a credit for foreign income tax on foreign-source income equal to the lesser of the foreign tax paid and the Pakistan tax on that income (average Pakistani rate × net foreign-source income), computed separately for each head of income; unused credit is not refunded, carried back or forward; the foreign tax must be paid within two years after the end of the tax year.
para 21 Sch. 6 ITA 1967 (LHDN, «Tax treatment of residents and non-residents», 2025) — A non-resident's pay for work in Malaysia is exempt if the work in the basis year lasted no more than 60 days (with exceptions, e.g. for entertainers paid from public funds). Otherwise a non-resident pays 30% without reliefs or rebates.
Art. 23 Pakistan–Malaysia Agreement (1982) — (2) Pakistan: Malaysian tax paid by a resident of Pakistan on income from sources in Malaysia taxed in both States is allowed as a credit against Pakistan tax on that income, up to the proportion of Pakistan tax which that income bears to the entire income chargeable to Pakistan tax. (3) Malaysia: Pakistan tax paid by a resident of Malaysia on income from sources in Pakistan taxed in both States is credited against Malaysian tax on that income, up to the proportion of Malaysian tax which that income bears to the entire income chargeable to Malaysian tax. (4) Tax reduced or exempted under a State's tax incentive programme is deemed payable for the credit.
ss. 107A, 109, 109A, 109B, 109F ITA 1967 (LHDN, withholding tax) — Withholding by the payer on payments to a non-resident: interest — 15%, royalties — 10% (s. 109); public entertainers — 15% (s. 109A); fees for services in connection with property, technical management or advice, rent of movable property — 10% (s. 109B, only for services performed in Malaysia); other income under s. 4(f) — 10% (s. 109F); contract payments for services — 10% + 3% (s. 107A). A double tax treaty may reduce the rates.
Real Property Gains Tax — Schedule 5 RPGTA, Parts I and III (LHDN) — Tax on gains from disposals of Malaysian real property: citizens and permanent residents — 30% (up to 3 years of ownership), 20% (4th year), 15% (5th year), 0% (from the 6th year); persons who are neither Malaysian citizens nor permanent residents — 30% (up to 5 years), 10% (from the 6th year).
Arts. 11, 12, 13 and 16 Pakistan–Malaysia Agreement (1982) — Interest arising in one State and beneficially owned by a resident of the other may be taxed in the source State at no more than 15% of the gross amount (Art. 11(2)); royalties — no more than 15% (Art. 12(2)); approved industrial royalties derived from Malaysia by a resident of Pakistan are exempt from Malaysian tax (Art. 12(3)). Gains from immovable property may be taxed where it is situated (Art. 13(1)). Directors' fees paid by a company resident in one State, and payments to its officials in top-level managerial positions, are taxable only in that State (Art. 16).
Income Tax Rules, 2002, rule 19B — A non-resident may apply to the Competent Authority of Pakistan for a certificate of tax paid in Pakistan (by deduction, collection or otherwise) for presentation to the tax authority of the country of residence; proof of residence in that country is required.
Art. 26 Pakistan–Malaysia Agreement (1982) (as replaced by Art. 16 of the MLI) — A person who considers that the actions of one or both States result or will result in taxation not in accordance with the Agreement may present the case to the competent authority of either State within three years from the first notification of the action.
Income Tax Ordinance, 2001, s. 82(c) — An individual is a resident individual for a tax year if he or she is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year — regardless of days in Pakistan.
Arts. 18 and 19 Pakistan–Malaysia Agreement (1982) — Pensions, annuities and similar periodic payments after retirement for past employment paid to a resident of a State are taxable only in that State (Art. 18). Remuneration, other than a pension, paid by a State, a political sub-division or a local authority for services rendered to it is taxable only in that State, but only in the other State if the services are rendered there by a resident of that State who is its national or did not become its resident solely to render the services (Art. 19(1)); government pensions are taxable only in the paying State (Art. 19(2)).
Income Tax Ordinance, 2001, s. 51 — (1) A citizen who becomes resident in a tax year after being non-resident in the four preceding tax years: foreign-source income is exempt in that tax year and the following one. (2) A citizen who leaves Pakistan during a tax year and remains abroad for the rest of it: salary earned outside Pakistan in that year is exempt.
LHDN: Certificate of Residence (e-Residence) — LHDN issues certificates of Malaysian tax residence for the application of double taxation agreements; the application is made online.
Income Tax Rules, 2002, rule 19A — A resident who needs a certificate of residence for a treaty country applies to the Competent Authority of Pakistan (FBR, Islamabad) in the prescribed form with proof of foreign income, CNIC, NTN and the latest return; a separate application and certificate for each tax year; decision within 45 days.
Sch. 1 Part I ITA 1967 — rates for residents, YA 2023–2025 (LHDN) — Rates for residents: 0% up to RM 5,000; 1% — 5,001–20,000; 3% — 20,001–35,000; 6% — 35,001–50,000; 11% — 50,001–70,000; 19% — 70,001–100,000; 25% — 100,001–400,000; 26% — 400,001–600,000; 28% — 600,001–2,000,000; 30% — above RM 2,000,000. Non-residents — 30%.
Income Tax (Determination of Chargeable Income of an Individual in respect of Dividend) Rules 2025, P.U.(A) 148/2025 — From YA 2025, dividends of an individual (resident or non-resident) above RM 100,000 a year are taxable under Part XXII Sch. 1 ITA 1967; the Rules determine which part of chargeable income is attributable to dividends.
Art. 4(2)(a) Pakistan–Malaysia Agreement (1982) — A dual-resident individual is deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available in both States, of the State with which his personal and economic relations are closer (centre of vital interests).
Art. 4(2)(b) Pakistan–Malaysia Agreement (1982) — If the State of the centre of vital interests cannot be determined, or if he has no permanent home available to him in either State, he is deemed to be a resident of the State in which he has an habitual abode.
Art. 4(2)(c), (d) Pakistan–Malaysia Agreement (1982) — If he has an habitual abode in both States or in neither, he is deemed to be a resident of the State of which he is a national (c); if he is a national of both States or of neither, the competent authorities settle the question by mutual agreement (d).
Art. 26 Pakistan–Malaysia Agreement (1982) (as modified by Art. 16 of the MLI) — A person who considers that the actions of one or both States result in taxation not in accordance with the treaty may present the case to the competent authority of either State within three years from the first notification of the action.

Updated 10/11/2026. The result is for information only and is not tax or legal advice. The FBR, other tax authorities and courts may interpret the rules differently, including because of circumstances not covered here, and the law changes with each Finance Act. Consult a qualified adviser before making decisions.

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