Income Tax Rate for Returning Expert Programme (REP)

Introduction of Returning Expert Programme (REP)

Highly skilled workers play an important role in the economic innovation and growth of a country and REP is to encourage skilled Malaysian professionals to return to Malaysia,
REP was administered by Talent Corporation Malaysia Berhad (TalentCorp), a government agency from 1 January 2011 in accordance with the law applicable to an individual whose employment commences on or after 1 May 2011.
Application portal : http://rep.talentcorp.com.my/

Tax Rate for REP

Individuals who have been approved under the REP are eligible to enjoy an optional flat rate of 15 percent preferred tax rate on taxable employment income for a period of 5 consecutive year of assessment (YA) starting from the first YA chosen by the individual.
The tax rate will only beneficial to an individual, if his/her employment income is RM12,500 per month (gross employment income) or RM135,000 per annum (total chargeable employment income).

REP Benefits

Tax exemption on car
Individual who acquired one new locally manufactured Complete Knocked Down (CKD) or bring back one fully imported Complete Built Up (CBU) car is exempted from duty or taxes up to a maximum of RM150,000 worth of duty or taxes.
In respect of car imported back from abroad, the exemption will only applicable, provided:

1. The car must be owned for at least 9 months before submission of REP
2. The car must be registered under REP’s applicant name
3. The car must be registered in the same country from which the applicant is applying from

Permanent resident status for foreign spouse and children
The foreign spouse and children will be eligible for Permanent Resident (PR) status, within six (6) months upon receipt of their complete PR application form by the Immigration Department of Malaysia. This PR status is only applicable for Peninsular Malaysia.

Tax exemption on personal effects
A special tax exemption is granted for application who carry his/her personal effects into Malaysia, however it is limited to one shipment. The personal effects encompass furniture and fittings, electronic gadgets and other household items, but does not include motorized vehicle.

Monthly tax deduction/PCB
Upon opt for REP, The approved individual is required to inform his/her employer by submitting the Surat Akuan Tarikh Kembali  to deduct MTD at 15%.

Requirements  for REP

As set out in PR 2/2018, in order to obtain approval for the preferred tax rate, an individual shall comply the following criteria:-

1. A Malaysian citizen and resident in Malaysia
2. Has made an application under REP and the application has been approved by the Minister for tax purpose under Part XV of Sch 1 of ITA and the application was made on or after 12 April 2011 but not later than 31 December 2020
3. An expert in the field determined by the Minister
4. Has not derived any employment income in Malaysia for at least 36 consecutive months prior to the date of application made; and
5. An REP’s application has never been approve before.

In addition to the above, the Minister has imposed additional terms as follows:-

1. REP application should be submitted when the applicant is still living and working abroad;
2. Employment income shall be received from any person resident in Malaysia
3. Not having a bond either financially or legally with other government companies or agencies to return to Malaysia;
4. Not having a bond of outstanding scholarship or loan payment with the Malaysian government or its agencies.

Areas of Expertise to Considered for REP

Only specific sectors are recognised for REP application under the National Key Economic Areas (NKEAs).
Sectors which are eligible for REP application:-

1. Oil, gas and energy
2. Trading services
3. Financial services
4. Heath care
5. Communication and infrastructure
6. Electronics and electrical
7. Education
8. Wholesale ad retailing
9. Tourism
10. Agriculture
11. Palm oil and rubber
12. Greater Kuala Lumpur/Klang valley

These are the overview of REP as mentioned above, REP able to get tax saving more than tax resident Malaysia. If you need any assistance regarding REP, kindly contact us at 011-1217 8183.