Key takeaways
- You are a Malaysian tax resident for a year if you are present for 182 days or more in that calendar year; additional linking rules (adjacent-year periods, the 90-day test combined with earlier years) can keep you resident with fewer days.
- When an employee leaves Malaysia for more than three months, the employer must notify the Inland Revenue Board (LHDN) – Form CP21 – at least 30 days before departure and withhold final payments until tax clearance is given.
- Once non-resident, you are taxed only on Malaysian-source income, generally at a flat 30% on employment income without personal reliefs; Malaysia does not tax foreign-source income remitted by resident individuals until 31 December 2036 (P.U.(A) 451/2024).
Last reviewed: October 2026
Leaving Malaysia is less about breaking ties and more about days and paperwork: the residence test is a day count, and departure triggers a formal tax-clearance procedure. Skipping it can delay your final salary or EPF withdrawals. This guide explains both in 2026.
Leaving Malaysia – key figures (2026)
| Item | Rule |
|---|---|
| Main residence test | 182 days or more in the calendar year |
| Linking / other tests | Adjacent-year periods; 90 days + residence in 3 of the 4 previous years; residence in the following year and 3 previous years |
| Departure notification (employees) | Employer files CP21 at least 30 days before departure |
| Tax clearance | Employer withholds monies until LHDN clearance |
| Non-resident rate on employment income | Flat 30%, no personal reliefs |
| Foreign-source income of individuals | Exempt when remitted, until 31 December 2036 |
| Exit tax | None for individuals |
When do you stop being a Malaysian tax resident?
Malaysia's Income Tax Act 1967 determines residence by days of presence:
- 182 days or more in the calendar year → resident;
- fewer than 182 days, but linked to a period of 182 consecutive days spanning the adjacent year (short temporary absences for business, medical or social reasons can count);
- 90 days or more in the year and resident (or 90+ days) in 3 of the 4 preceding years;
- resident in the following year and in the 3 immediately preceding years.
Because of rules 2–4, long-term residents leaving mid-year can remain resident for the year of departure – which can be favourable (resident rates and reliefs) rather than harmful.
Step-by-step: leaving Malaysia
- Tell your employer early: it must file Form CP21 with LHDN at least 30 days before you leave for more than three months, and stop paying monies due to you until clearance.
- File your final return (Form BE/B or M as appropriate) including income up to departure.
- Obtain the tax clearance letter from LHDN; your employer can then release final pay.
- EPF: non-citizens leaving permanently can withdraw EPF savings with proof of departure.
- Close or convert accounts and update your address with banks for CRS reporting.
- Establish residence elsewhere and keep proof.
Self-employed individuals and business owners should also settle instalment (CP500) obligations and deregister businesses if no longer active.
What stays taxable in Malaysia after you leave?
- Employment income for work performed in Malaysia (flat 30% for non-residents);
- rental income from Malaysian property;
- gains on Malaysian real property under real property gains tax (RPGT), with rates depending on holding period and status;
- director's fees from Malaysian companies.
Example: A British engineer who lived in Kuala Lumpur for five years leaves on 30 April 2026 for Singapore. Although he spent only 120 days in Malaysia in 2026, the "3 of 4 previous years" rule may keep him resident for 2026, so his salary up to April is taxed at resident rates with reliefs. His employer files CP21 in March and releases his final salary after LHDN clearance.
Points for location-independent professionals
- DE Rantau digital nomad pass holders: there is no special tax exemption for the pass, but foreign-sourced income remitted by resident individuals is exempt until 2036; note that pay for work physically performed in Malaysia can be treated as Malaysian-source. Leaving involves little tax formality.
- MM2H participants: holding the visa does not by itself make you resident; days do.
- Malaysian citizens moving abroad: once non-resident, only Malaysian-source income is taxed; keep proof of foreign residence for treaty claims.
Frequently asked questions
How do I stop being a tax resident in Malaysia?
Spend fewer than 182 days in Malaysia in the calendar year and avoid the linking and multi-year tests. Long-term residents can remain resident in the year they leave under these rules.
What is Form CP21?
CP21 is the employer's notification to LHDN that an employee is leaving Malaysia for more than three months. It must be filed at least 30 days before departure, and the employer withholds monies due until tax clearance.
Do I need a tax clearance letter to leave Malaysia?
Employees whose employer has filed CP21 need LHDN clearance before final payments are released. Without it, your employer cannot pay you outstanding remuneration.
How are non-residents taxed in Malaysia?
Non-residents pay a flat 30% on Malaysian employment income without personal reliefs, and are taxed on other Malaysian-source income such as rent. Foreign-source income is not taxed.
Related guides
- Malaysia updates work visa policies
- Tax incentives for expats in Malaysia
- Best country in Asia to work and save money
Sources
- PwC Worldwide Tax Summaries – Malaysia: Residence
- Income Tax Act 1967, section 7 and section 83(3)
- Inland Revenue Board of Malaysia (hasil.gov.my) – CP21 and tax clearance
This guide is general information, not personalised tax advice.
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