Leaving Malaysia in 2026: how to end your tax residency cleanly

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You're leaving Malaysia for Singapore, Dubai or home, and you want a clean exit. After reading, you'll know when your residence really ends, which forms to file, and what Malaysia can still tax once you're gone.

Malaysia ceasing tax residency in 2026: the key figures

Is this guide for you?

Read on if you…

• are an expat employee or freelancer leaving Malaysia in 2026 or 2027;
• are a Malaysian citizen moving abroad for work;
• want to know what stays taxable in Malaysia after you go.

Probably not your case if you…

• are only travelling for a few months and coming back the same year;
• are just arriving (see how to obtain tax residency in Malaysia).

When do you stop being a Malaysian tax resident?

Malaysia's Income Tax Act 1967 decides residence by days of presence, one calendar year at a time. You are resident for a year if you pass any one of four tests:

Here's the catch for long-term expats. Tests (b) and (c) can keep you resident in your departure year, even with only a few months in Malaysia.

Honestly? That's often good news. Resident status gives you progressive rates and reliefs on your salary up to departure. Non-resident status means a flat 30%.

Your residence ends cleanly in the first full year where you pass none of the tests. For the details, see tax residency in Malaysia.

What do you need to do before you leave?

If you're an employee

1. Tell your employer early. If you leave for more than three months, your employer must file Form CP21 with the Inland Revenue Board (LHDN) at least 30 days before departure.
2. Expect a hold on final pay. Your employer must stop paying money due to you until LHDN issues tax clearance.
3. File your return for the departure year. It covers income up to the day you leave. Employees use Form BE if resident, or Form M if non-resident.
4. Get the clearance letter. Once tax is settled, LHDN confirms clearance and your employer can release your final salary.

Foreign employees who leave Malaysia permanently follow the same CP21 route. Employers who skip it can become liable for the unpaid tax.

If you're self-employed or run a business

1. Settle your instalment payments (CP500) for the year.
2. File Form B for the departure year by 30 June of the next year.
3. Close or deregister your business registration with the Companies Commission (SSM) if it is no longer active.
4. If you keep a Malaysian company, check where it will be managed from once you've left.

For everyone

• Pay any outstanding tax. LHDN can ask Immigration to stop you leaving if you owe tax.
• Withdraw your EPF if eligible. Non-citizens leaving Malaysia permanently can withdraw their EPF savings with proof of departure.
• Update your banks. Give them your new address and tax residence for CRS reporting.
• Set up residence in your next country. Keep the lease, registration and visa as proof.

What stays taxable in Malaysia after you leave?

Once you're non-resident, Malaysia only taxes Malaysian-source income. The main items:

• Pay for work performed in Malaysia, at a flat 30%. Short stints of 60 days or less in a year are exempt for non-residents.
• Rental income from Malaysian property, at 30% on net rent.
• Gains on Malaysian property, under real property gains tax (RPGT). Non-citizens pay 30% in the first five years and 10% from year six.
• Director's fees from Malaysian companies.
• Interest and royalties, through withholding tax of 15% and 10%.

Dividends from Malaysian companies are generally tax-free for non-residents. Malaysia does not levy an exit tax on your shares, crypto or other assets when you leave. See capital gains tax in Malaysia for property and share rules.

Your exit timeline: before, during and after

Two to three months before. Check which residence tests you will pass in your departure year. Tell your employer. Check the tax rules of your next country.

The month you leave. Employer files CP21 at least 30 days ahead. Collect payslips, the EA form and proof of departure. Settle outstanding tax.

After you leave. File the return for your departure year by 30 April (Form BE or M) or 30 June (Form B). Keep proof of foreign residence for treaty claims. Track any days you spend back in Malaysia.

Common mistakes (and what they cost)

• Leaving without telling your employer → no CP21, frozen final pay and possible liability for your employer.
• Assuming you're non-resident the day you leave → you misfile your departure year and get a reassessment, sometimes with penalties.
• Ignoring Malaysian rental income → 30% tax plus late-payment surcharges once LHDN matches tenancy data.
• Leaving tax debts behind → a travel ban the next time you try to exit Malaysia.
• Not proving residence in your new country → both countries may claim you, and treaty relief takes months.

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 often stay resident in the year they leave, because of the 90-day test combined with previous years. Your residence ends cleanly in the first full year in which no test is met.

What is Form CP21?

CP21 is the employer's notice to the Inland Revenue Board that an employee is leaving Malaysia for more than three months. It must be filed at least 30 days before departure. The employer must then withhold money due to the employee until LHDN gives tax clearance.

Do I need a tax clearance letter to leave Malaysia?

If your employer has filed CP21, yes. Your final salary and other payments stay frozen until LHDN confirms that your tax is settled. Self-employed people do not go through CP21, but they must still file their final return and pay any tax owed before leaving.

Is there an exit tax when leaving Malaysia?

No. Malaysia has no exit tax for individuals. Your shares, crypto and foreign investments are not taxed when you move away. Malaysian property stays within real property gains tax when you sell it, and Malaysian-source income such as rent remains taxable at non-resident rates.

How are non-residents taxed in Malaysia?

Non-residents pay a flat 30% on Malaysian employment and business income, with no personal reliefs. Interest and royalties are taxed through withholding at 15% and 10%. Foreign-source income is not taxed. Employment in Malaysia of 60 days or less in a year is exempt for non-residents.

Can I withdraw my EPF when I leave Malaysia?

Non-citizens who leave Malaysia permanently can usually withdraw their full EPF balance. You apply to the Employees Provident Fund with your passport and proof of departure, such as a cancelled work pass. Malaysian citizens follow different, stricter withdrawal rules, so check with the EPF before you go.

Related guides

• How Malaysian tax residency is decided
• Moving to Malaysia: your residency plan
• Capital gains tax in Malaysia
• Malaysia tax system overview
• How to cease tax residency in Singapore
• How to cease tax residency in Hong Kong
• All country tax guides

Sources

• Inland Revenue Board of Malaysia (LHDN)
• Laws of Malaysia – Income Tax Act 1967 (Attorney General's Chambers)
• Employees Provident Fund (KWSP)
• Companies Commission of Malaysia (SSM)
• PwC Worldwide Tax Summaries – Malaysia: Residence

This guide is general information, not personalised tax advice. See how we research and review.