Ceasing your tax residency in Malaysia is a significant step that requires careful planning and understanding of the legal obligations involved. This guide will walk you through the essential steps to ensure a smooth transition.
Determine Your Tax Residency Status
Confirm your current tax residency status in Malaysia. You are generally considered a tax resident if you have been in Malaysia for 182 days or more in a calendar year. If you meet this criterion, you need to take steps to change this status before leaving.
Notify the Inland Revenue Board (IRB)
Inform the Inland Revenue Board of Malaysia (IRB) about your intention to cease being a tax resident. You will need to provide details such as your departure date, reason for leaving, and your new country of residence. This can be done through a formal letter or by filling out the relevant sections in the IRB's forms.
Settle Outstanding Taxes
Ensure that all your outstanding taxes are settled before you leave Malaysia. This includes filing any pending tax returns and paying any due taxes. The IRB may require you to provide a tax clearance letter from your employer if you are employed.
File Form CP21
Submit Form CP21 (Notification by Employer of Departure from the Country of an Employee) to the IRB. This form must be filed at least 30 days before your departure. Employers are responsible for notifying the IRB about the employee's departure and ensuring that all tax obligations are met.
Obtain Tax Clearance Letter
Once you have settled all outstanding taxes and submitted the necessary forms, request a tax clearance letter from the IRB. This letter serves as official confirmation that you have no outstanding tax liabilities in Malaysia and can be crucial for your future tax arrangements in your new country of residence.
Update Personal Records
Update your personal records with various institutions such as your bank, social security, and other relevant bodies to reflect your change in residency. This ensures that you receive any necessary correspondence and that your records are accurate.
Legal References
- Income Tax Act 1967
- Inland Revenue Board of Malaysia (IRB) Guidelines
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