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  • Prasna Devi

Guide to Tax Clearance for Expatriates in Malaysia

Imagine waking up one day and finding yourself in the situations below 😰

💰 Last salary withheld by the Inland Revenue Department (LHDN)

💸 A fine between RM200 and RM20,000

👮🏻 Imprisonment of up to 6 months

🚫 Prevented from leaving the country

What a nightmare!

If you are an expat in Malaysia, here’s an important reminder and guide on how to submit your TAX CLEARANCE prior to you leaving the country for >3 months or leaving your job.

What Is Tax Clearance?

Tax clearance certificate is a certificate given by the Inland Revenue of Malaysia to indicate any outstanding income tax by the employee. It applies to everyone whether local, foreigner, or expatriate.

Did You Know?

When tax clearance is not done, the last salary or compensation of one upon resignation, termination of the contract, or retirement may be withheld by the Malaysian Inland Revenue Department (LHDN).

Any expatriate leaving Malaysia for more than three months need to do their tax clearance.

When to Do Tax Clearance

  • Resignation, termination of the contract, or retirement - 30 days in advance

  • Unforeseen eventualities like death - within 30 days

  • Leaving before the due date for tax clearance and your income tax is deducted monthly (usually on the 30th of April) - don’t have to submit your income tax return

  • If it is a month to 30th April - your previous years’ income tax returns need to be filed

Application Guide for Tax Clearance in Malaysia

The submission of the duly filled clearance forms can be done manually by visiting the LDHN offices or online through the e-SPC.

There are three different forms that HR will fill depending on the employee’s employment status.

Penalty for Late Submission of Tax Clearance Forms

It is a criminal offense in Malaysia to delay the submission of tax clearance forms.

The penalty will be either a fine of between MYR 200 and MYR 20,000, imprisonment of up to six months, or both as deemed appropriate by the Malaysian Inland Revenue laws.

This penalty does not only apply to the employer, but the expatriate should he/she be flagged as a tax evader, he/she will be prevented from leaving Malaysia.

For any tax-related questions or further assistance, feel free to get in touch with us via 📲

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