Introduction
Residence status Malaysia income tax determination is crucial because it affects your tax rate, relief eligibility, and filing obligations. Under the Income Tax Act 1967 (Section 7), residence is determined based on the number of days an individual is physically present in Malaysia — not nationality or citizenship.
Residents enjoy progressive tax rates (0 % – 30 %) and can claim personal reliefs, while non-residents are taxed at a flat 30 % with no reliefs or rebates.
What Determines Residence Status
The residence status of an individual is based on the number of days of physical presence in Malaysia within a calendar year (basis year) for a particular year of assessment (YA).
Section 7(1)(a) — 182-Day Rule
An individual is resident if physically present in Malaysia for ≥ 182 days during a calendar year.
These 182 days may be continuous or made up of several shorter stays within the same year.
Section 7(1)(b) — Linked Periods Rule
An individual who stays less than 182 days in the current basis year can still be treated as resident if the period is linked to another period of ≥ 182 consecutive days.
Temporary absences are allowed if due to:
- Employment matters (training, meetings, study abroad)
- Ill-health (taxpayer or immediate family)
- Social visits not exceeding 14 days
Note: The taxpayer must be present in Malaysia both before and after the linked absence.
Section 7(1)(c) — 90-Day + 3-of-4-Years Rule
If the taxpayer is in Malaysia for ≥ 90 days in the current YA and was either:
- Resident under Section 7 in any 3 of the 4 preceding YAs, or
- Present in Malaysia for ≥ 90 days in those 3 of 4 YAs,
then they are deemed resident for the current YA.
Section 7(1)(d) — 3 + 1 Rule
An individual is also resident if:
- Resident for the immediately following YA, and
- Resident for the 3 immediately preceding YAs.
This provision ensures continuity for taxpayers with consistent residence patterns.
Key Takeaways
- Residence is based on physical presence, not nationality.
- Residents enjoy progressive tax rates and reliefs.
- Non-residents are taxed at a flat 30 % without reliefs.
- Four main residence tests under Section 7 ITA 1967.
- Keep proper travel records (entry/exit dates) for verification.
ANC Group – Your Personal Tax Advisor
Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies.
Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends.
ANC Group keep you abreast with Malaysia tax updates and any changes in the local regulations.
We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.
If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.
