DoubleTaxationTaxes on salary: Malaysia
How much tax and social security is paid on a salary in Malaysia, what is left as take-home pay, and which special tax regimes exist.
Calculation for a gross salary of €60,000 per year
| Gross salary | MYR 285,102 ≈ €60,000 |
|---|---|
| Income tax | |
| Cukai pendapatan | MYR 52,338 ≈ €11,015 |
| Employee contributions | |
| Caruman Kumpulan Wang Simpanan Pekerja (KWSP) | MYR 31,361 ≈ €6,600 |
| Caruman PERKESO (Akta Keselamatan Sosial Pekerja 1969) | MYR 360 ≈ €76 |
| Caruman Sistem Insurans Pekerjaan (SIP) | MYR 144 ≈ €30 |
| Take-home pay | MYR 200,899 ≈ €42,279 |
| Employer contributions and payroll taxes | |
| Caruman Kumpulan Wang Simpanan Pekerja (KWSP) | MYR 34,212 ≈ €7,200 |
| Caruman PERKESO (Akta Keselamatan Sosial Pekerja 1969) | MYR 1,260 ≈ €265 |
| Caruman Sistem Insurans Pekerjaan (SIP) | MYR 144 ≈ €30 |
| Employer's labour cost | MYR 320,718 ≈ €67,495 |
Only some of the country's direct taxes and levies are counted: income tax on wages and compulsory contributions. Not counted: property and real-estate taxes; taxes on dividends, interest and other investment income; inheritance and gift taxes; indirect taxes such as VAT, excise and customs duties.
This country is not covered by OECD Taxing Wages; the calculation is ours, using the same methodology.
Special tax regimes
These regimes are not included in the calculation above: each has its own conditions.
Returning Expert Programme (REP) — Part XV, Schedule 1, Income Tax Act 1967
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.
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.
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)
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.
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.
Knowledge worker in a specified region — Part XIV, Schedule 1, Income Tax Act 1967 (Iskandar Malaysia; Johor-Singapore Special Economic Zone)
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).
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.
Exemption of foreign-sourced income received in Malaysia by resident individuals — P.U.(A) 234/2022, as amended by P.U.(A) 451/2024
Who: Individuals resident in Malaysia (citizens and foreigners) with income from abroad.
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.
Exemption of employment income of a non-resident for employment in Malaysia not exceeding 60 days — Schedule 6, para 21, Income Tax Act 1967
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).
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.
Legal basis: Income Tax Act 1967, Schedule 6, paras 21–22; LHDN Public Ruling No. 2/2026, para 4.6.1
Exemption of pensions derived from Malaysia — Schedule 6, para 30, Income Tax Act 1967
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.
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.
Legal basis: Income Tax Act 1967, Schedule 6, para 30
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
Who: Individuals receiving dividends from companies, derived from Malaysia (single-tier system).
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.
Legal basis: Income Tax Act 1967, Schedule 6, para 12B(2); Schedule 1, Part XXII
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
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.
Income from employment with such a company for work exercised outside Malaysia is exempt; income for work in Malaysia is taxed normally.
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
Tax residence
When Malaysia treats you as a tax 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).
Assumptions
- Calculated with the OECD Taxing Wages methodology: income tax including local taxes plus employee social security; single person without children, tax year 2026, ECB rate of 2 January 2026.
- Year of assessment (YA) 2026 = calendar year 2026. Malaysian tax resident (182 days or more), single, no children, Malaysian citizen under 60, one private-sector employer; pay spread evenly over the year (monthly = annual / 12), bonuses taxed as ordinary employment income.
- Automatic reliefs for this person: personal RM9,000 (s. 46(1)(a) ITA 1967); compulsory EPF contributions up to RM4,000 (s. 49(1)(b)); SOCSO and EIS contributions up to RM350 (s. 46(1)(n)); tax rebate RM400 where chargeable income does not exceed RM35,000 (s. 6A(2)(a)), capped at the tax. Expense-based reliefs (insurance, medical, education, lifestyle, etc.) and the zakat rebate are excluded.
- Compulsory contributions counted: EPF (KWSP, provident fund) — employee 11%, employer 13% where monthly wages do not exceed RM5,000, otherwise 12%, no ceiling; SOCSO (PERKESO) — employee 0.5% (invalidity scheme), employer 1.75% (employment injury 1.25% + invalidity 0.5%); EIS (employment insurance) — 0.2% + 0.2%. SOCSO and EIS apply to wages up to RM6,000 a month. EPF is counted in full, like pension contributions in other countries on the site, although it is an individual-account fund.
- Not counted: the HRD Corp training levy (paid by the employer; depends on employer size and sector); the employee contribution to PERKESO's Lindung 24 Jam scheme (introduced in June 2026, voluntary for Malaysian employees since 9 July 2026); different EPF/SOCSO rules for non-citizens; the 30% flat rate without reliefs for non-residents.
- Annual calculation using percentages. The official EPF, SOCSO and EIS tables work in wage bands and round up to the ringgit; monthly tax deduction (PCB/MTD) is an advance, and final tax is settled in the annual return. The difference is a few ringgit a year.
- Local taxes — location: Kuala Lumpur (federal income tax; no local income tax)
- Tax period: 2026-01-01 – 2026-12-31
- Exchange rate: 1 EUR = 4.7517 MYR (ECB euro foreign exchange reference rate (MYR), 02/01/2026)
Sources
- Income Tax Act 1967 (Act 53), online updated text as at 1 January 2026: s. 3, s. 6A(2)(a) and (4) (rebate RM400), s. 46(1)(a) (RM9,000) and (n) (SOCSO/EIS RM350), s. 49(1)(b) and (1A) (EPF RM4,000), Schedule 1 Part I paras 1 and 1A, Parts XIV, XV, XVIII, XXII; Schedule 6 paras 12B, 21, 28, 30
- LHDN, Specification for Monthly Tax Deduction (MTD) Calculations Using Computerized Calculation for 2026 (updated 1 January 2026): Table 1 (scale and rebate), reliefs (individual RM9,000, EPF RM4,000, SOCSO RM350), Exhibit 5
- LHDN Public Ruling No. 5/2026, Taxation of a Resident Individual Part I (04.11.2026), para 6.10 (SOCSO/EIS relief)
- LHDN Public Ruling No. 1/2026, Tax Incentive for Returning Expert Programme (16.03.2026), Examples 5–6
- LHDN Public Ruling No. 2/2026, Tax Treatment of Foreign Nationals Exercising Employment in Malaysia (27.03.2026)
- MIDA, Statutory Contributions: EPF Act 1991 Third Schedule (employee 11%, employer 13% up to RM5,000 / 12% above), SOCSO (employer 1.75%, employee 0.5%), EIS (0.2% + 0.2%)
- PERKESO, Contribution rate: wage ceiling raised from RM5,000 to RM6,000 a month from 1 October 2024
- RTM, 'Skim LINDUNG 24 Jam kekal mandatori bagi pekerja asing' (09.07.2026): contribution voluntary for local employees (Minister of Human Resources)
- LHDN Guidelines on tax treatment in relation to income received from abroad (amended 20.06.2024)
- MIDA, Guidelines and Procedures for the Special Tax Incentive (Relocation), Manufacturing Sector (11.12.2023): C-Suite 15% for 5 years
- MIDA, Process Flow for the Approval of C-Suite Position under the Global Services Hub Incentive (20.03.2025)
- ECB, euro foreign exchange reference rates: MYR 4.7517 on 02.01.2026
Data checked: 10/11/2026. An indicative calculation for a typical case. Not tax advice.