Taxation

Special Income Remittance Program (PKPP) For Malaysian Tax Resident With Foreign Sourced Income

According to the government, the tax exemption on foreign-sourced income will be withdrawn. Malaysia tax residents with foreign sourced income are needed to submit tax in 2022. At the same time, LHDN has introduced Special Income Remittance Program (PKPP) to let Malaysia tax resident having lowest tax rate.

Latest News: (30.12.2021)

According to MOF, the government will exempt on foreign sourced income (FSI) remitted to Malaysia for the following categories:
1. Exempt all income received by individuals
2. Dividend income received by companies /LLP
The Exemption Period will be 01.01.2022 to 31.12.2026.

If you are Malaysia tax resident, you need to submit personal income tax on every income, but the government has exempted the tax submission on foreign sourced income for previous years. However, this exemption will be ended in 2022. Starting from 2022, you will need to pay income tax for foreign sourced income.

For those who stays in Malaysia for more than 182 days.

It is a special plan introduced by LHDN to let tax resident who have foreign sourced income to enjoy lowest tax rate at 3% for the income they brought into Malaysia.

01.01.2022 – 30.06.2022

All Malaysia taxpayers are eligible, including individual, company, LLP, cooperatives, trust bodies, business trusts, associations and so on.

Income kept abroad remitted to Malaysia by a resident whether business income, employment salary, dividends, rent, interest, royalties or others.

*Including income from year of assessment 2020 and previous year of assessment which not yet reported.

When the income is remitted / brought in / transferred to Malaysia physically or through banking methods.

Taxpayers need to make declaration via Borang PKPP which can be downloaded via MyTax (https://mytax.hasil.gov.my/) after 01.01.2022.

Yes, taxpayers applied for this deduction have to keep the documents as a proof.

The income remitted will be taxed in accordance with the Malaysia Income Tax Rate.

  • The income remitted will be taxed at a special rate of 3% (gross)
  • The income remitted is not subject to audit / investigation review or imposition of penalties
  • The income remitted is eligible to claim tax credit deduction on both sides or one side

After PKPP ends, LHDN will review and examine the income information of Malaysia residents stored abroad under tax information exchange agreement agreed by other countries.

Sources: FAQ_PKPP