STD Payment for Expatriates

By: Chee Tiong & Co  10-02-2010
Keywords: Accounting & Tax Services, Accountant, Mm2h

 

Foreign workers who have just started working in Malaysia and who have not reached 182 days of living in Malaysia will be deducted STD at 28%. On reaching 182 days of living in Malaysia, the employee is eligible for relief on his yearly remuneration. The STD that was deducted at 28% at the beginning will be adjusted to the actual amount and backdated. To obtain an example, please select facsimile in the next menu.

Example 1 :

The employee is not resident if he is in Malaysia for less than 182 days in the basis year. Therefore, the STD deduction for the duration the employee has not reached resident status is as follows:

Monthly Remuneration            :            RM3,000.00
STD Calculation                      :            RM3,000.00 * 28%
Total STD                                :            RM840.00

Example 2 :

Expatriate A comes to Malaysia on 15/01/2007 and starts working on 1st February 2007. His monthly remuneration is RM12000.

STD Adjustment

Expatriate A becomes a resident on 16th July 2007 [Section 7(1) (a)]. As a result, he is eligible for relief on his remuneration for 2007. The STD that had been deducted @ 28% beginning from remuneration in February 2007 will be adjusted to the actual amount and (backdated).

Example 3 :

Expatriate B comes to Malaysia on 20th May 2007 and starts working on 1st June 2007. His monthly remuneration is RM8,500.

STD Adjustment

Expatriate B becomes a resident on 17th November 2007 [Section 7(1) (a)]. As a result, he is eligible for relief on his remuneration for 2007. The STD that had been deducted @ 28% beginning from remuneration in June 2007 can be adjusted to the actual amount but only in the same year.

 

 

Note: Excess payment of RM5880 (11990 - 6020) cannot be set off with STD for January 2008 onwards. However, the taxpayer can request for a refund of excess tax paid after the Return Form has been submitted.

Example 4 :

Pegawai dagang C mula datang ke Malaysia pada 18 September 2007 dan mula bekerja pada 1 Oktober 2007. Gaji bulanan adalah sebanyak RM15,000.

Pelarasan PCB :

Expatriate C first comes to Malaysia on 18th September 2007 and starts working on 1st October 2007. His monthly remuneration is RM15000.

Expatriate C becomes a resident on 30th June 2008 [Sec. 7(1)(b)]. As a result, the taxpayer is eligible for relief on 2007 and 2008 remuneration. The original assessment for 2007 can be adjusted with a reduced assessment after the resident status date. Std adjustment for 2008 remuneration is done based on the above 2 scenarios.

Keywords: Accountant, Accounting & Tax Services, Am I taxable?, Chargeability of Income Tax for Foreigners, Expatriate Tax, Mm2h, Personal Relief, Scope of Taxation, The Expat,