Malaysian Digital Nomad Taxes
The Malaysian Digital Economy Corporation (MDEC) has introduced the DE Rantau Nomad Pass, a type of Professional Visit Pass which allows qualified foreign digital nomads to travel and work in Malaysia with multiple entries for up to 24 months.
This article provides an overview of the taxation rules and regulations applicable to digital nomads in Malaysia. It seeks to explain the different types of passes available, qualifications required, nationalities allowed, minimum age requirement, access to bank accounts and child education options. Furthermore, it will also look at how taxes are calculated for digital nomads in Malaysia.
With this information in hand, digital nomads can determine their tax liabilities while working in the country.
Overview of Malaysian Digital Nomad Visa
The DE Rantau Nomad Pass is a newly designed Professional Visit Pass that allows qualified foreign professionals to travel and work in Malaysia for up to 24 months. This type of pass provides multiple benefits, such as exclusive access to nomad-ready living and working hubs, handpicked local services, discount vouchers, latest information and promotions.
Additionally, the pass facilitates multiple entries into the states within Peninsular Malaysia; although entry into Sabah or Sarawak requires a tourist pass at this time. MDEC is currently working with the relevant states to address this limitation.
DE Rantau Pass
DE Rantau Pass is a Professional Visit Pass designed to facilitate foreign IT and digital professionals to travel and work in Malaysia. It is valid between 3 to 12 months of stay with the option to renew for additional 12 months, allowing total of 24 months of stay.
The main pass holder must be over 18 years old, and immediate family members such as husband/wife/common-law partner, child under 18 years old, or disabled child with no age limit can also apply for the pass. Qualified applicants will receive multiple entry visits and exclusive benefits such as access to living and working hubs, services discounts vouchers, information and promotions.
Furthermore, documents proving income or contracts are required upon application; however most banks in Malaysia do not accept Professional Visit Pass for the applicant to open a bank account. For those who wish their children attend school in Malaysia while holding the DE Rantau Nomad dependant pass have to check directly with respective schools for further clarifications.
Lastly, this pass allows tourists entry only in states within Peninsular Malaysia; Sabah and Sarawak require tourist passes instead of DE Rantau Nomad Pass at the moment. Moving forward qualifications will be discussed in detail.
Qualifications
Qualified foreign IT and digital professionals may apply for the DE Rantau Nomad Pass, which requires proof of income or contracts in order to be eligible. This includes documents such as contracts or purchase orders or invoices with clients that clearly state contract duration and value, or an active employment contract with a non-Malaysian company. The pass offers multiple entries with exclusive benefits to members of DE Rantau.
Furthermore, applicants must be over 18 years old while immediate family members are eligible to apply. Dependents have an option either to enter Malaysia together with the main pass holder or to enter individually after the main applicant is in Malaysia. To further facilitate their stay in Malaysia, applicants should ensure their passport has a validity of more than 14 months upon submission of application.
Additionally, holders of the DE Rantau Nomad Pass will not be able to open bank accounts in Malaysia due to most banks rejecting this type of visa; however they can seek clarification from individual banks about their policies. With these requirements met, applicants can then move on to explore the various types and durations available for the DE Rantau Nomad Pass.
Pass Types and Duration
Foreign digital professionals may apply for the DE Rantau Nomad Pass, which offers multiple entries with varying types and durations available.
The Professional Visit Pass (Pas Lawatan Ikhtisas) is valid between 3 to 12 months of stay with the option to renew for additional 12 months, allowing total of 24 months of stay.
Furthermore, the main pass holder must be over 18 years old as this pass also allows immediate family members to join them in Malaysia.
Husband/Wife/Common-Law partner, children under 18 year old and disabled children (no age limit) verified by experts are eligible to apply.
However, it is important to note that while dependents can enter into Malaysia later or not together with the main applicant, spouses are not allowed to work in Malaysia under this pass.
Moving on,
Nationalities Eligible
The DE Rantau Nomad Pass is open for application to citizens of all nationalities; however, approval from the Ministry of Home Affairs in Malaysia is required for Israel citizens prior to entering the country.
This pass may be beneficial for many people, as it: – Offers a safe and secure way of traveling and working in Malaysia, – providing access to exclusive benefits such as handpicked local services and discount vouchers; – allowing multiple entries; and – increasing opportunities for digital nomads who are IT & digital professionals.
Additionally, the pass allows immediate family members to apply with the main pass holder: – Husband/Wife/Common-Law partner; – Child under 18 years old or disabled child (no age limit); and – Adopted child or stepchild under 18 years old.
However, holders of the DE Rantau Nomad Pass can only travel to Sabah or Sarawak using a tourist pass. MDEC is currently working with the relevant states to address this limitation, opening up more possibilities for digital nomads.
Family Members
Family members are an important part of the DE Rantau Nomad Pass application process. The eligibility criteria for family members of the main pass holder to apply include a husband/wife/common-law partner, a child under 18 years of age, or a disabled child with no age limit verified by experts.
Dependents have an option to either enter Malaysia together with the main pass holder or enter individually after the main pass holder is in Malaysia. It should be noted that spouses are not eligible to work in Malaysia under this pass. Furthermore, children may enroll in school depending on varying requirements; applicants must contact relevant schools for further clarifications.
In addition, multiple entries are allowed and holders of the DE Rantau Nomad Pass will be recognized as members with access to exclusive benefits such as nomad-ready living and working hubs and discounts vouchers. With these additional considerations for family members addressed, it is appropriate to move onto addressing the minimum age requirement for DE Rantau Nomad Pass holders.
Minimum Age Requirement
The DE Rantau Nomad Pass requires the main pass holder to be over 18 years of age. This ensures that the main applicant is an adult and capable of making their own decisions.
The pass does not have any minimum age requirement for dependents, although some states may require a different set of requirements in order to allow children to attend school while staying in Malaysia. Additionally, disabled children are allowed with verification from experts regardless of age.
Moving on, the pass allows multiple entries into Malaysia for both the main applicant and their dependents.
Multiple Entry Allowed
The DE Rantau Nomad Pass provides the option of multiple entries for both the pass holder and their dependents. This is beneficial for digital nomads who wish to travel in and out of Malaysia multiple times during their stay.
Furthermore, this allows foreign digital nomads to experience different aspects of Malaysian culture more easily than if they were limited to a single entry visa.
Moving on, access to banking services is another important consideration when it comes to digital nomads living in Malaysia.
Bank Account Access
Moving onto the next important question about DE Rantau Nomad Pass, bank account access is an issue that many digital nomads may face.
Most banks in Malaysia do not accept Professional Visit Pass for applicants to open a bank account. However, one can seek further clarifications with the respective bank of interest regarding this matter.
Furthermore, it is also important to note that according to the FAQ, “The validity of the passport must be more than 14 months upon submission of application” (DE Rantau Pass FAQ Version 1.7). This means that if the validity period of your passport is less than 14 months at the point of application and during its validity period, you must apply for a new passport before applying for DE Rantau Nomad Pass.
With these points in mind, transitioning into section C below will provide further clarity on applicable fees when applying for DE Rantau Nomad Pass.
Child Education
With regards to the DE Rantau Nomad Pass, school requirements vary depending on the institution and should be checked directly with the relevant schools for further clarifications.
The main pass holder must be over 18 years old, and only immediate family members of the main pass holder are eligible to apply:
- Husband / Wife / Common-Law partner
- Child, adopted child or stepchild under the age of 18 years
- Disabled child (no age limit) verified by experts
A dependent has an option either to enter Malaysia together with main pass holder or to enter individually after main pass holder is in Malaysia.
Malaysian Taxes For Digital Nomads: Tax Obligations On the DE Rantau Pass
Tax Implications
Malaysian citizens and residents are taxed on any income earned or obtained within the country. However, DE Rantau Nomad Pass holders are not obligated to pay taxes on income generated outside the country. Those whose clients are headquartered in Malaysia, though, and those who work for a Malaysian-based corporation, may be required to pay income tax.
Freelancers (Foreign) Outside of Malaysia:
- Taxation will be based on Section 4(a) of the Income Tax Act 1967.
- Worldwide income will be taxed.
- For the first 182 days in Malaysia, a withholding tax of 10% or preferential rates mentioned in the Double Taxation Agreements (DTA) will be applicable.
- After 182 days, income will be taxed as a resident conducting business under Section 4(a) and Section 12 of the Income Tax Act.
- Tax paid during the first 6 months (182 days) through withholding tax can be credited upon filing the Tax Return.
Remote Worker (Foreign) Outside of Malaysia:
- No tax is applicable if the stay in Malaysia is 60 days or less.
- If the stay exceeds 60 days, tax will be applied based on Section 4(b)/Sub-section 13(2) and Article 14 of the Double Taxation Agreement (DTA).
- The tax rate will depend on the residential status as defined in Section 7 of the Income Tax Act.
- Additional guidance can be found in the Inland Revenue Board of Malaysia’s Public Ruling No. 8/2011.
Are there any tax exemptions for digital nomads in Malaysia?
Digital nomads have the option to apply for the Professional Visit Pass (Pas Lawatan Ikhtisas) in Malaysia, which is a type of DE Rantau Nomad Pass newly designed to allow qualified foreign digital nomads to travel and work in Malaysia.
This type of pass is valid between 3 to 12 months with the option to renew for an additional 12 months; allowing total of 24 months stay.
The main pass holder must be over 18 years old and immediate family members are eligible to apply, but spouses are not allowed work under this pass.
Tax exemptions may vary depending on individual circumstances, but holders of DE Rantau Nomad Pass will be recognized as a member and receive access to exclusive benefits such as discounts vouchers, handpicked local services, latest information and promotions.
Frequently Asked Questions
Q: Are there any additional fees for renewing the DE Rantau Nomad Pass?
A: The DE Rantau Nomad Pass is a Professional Visit Pass offered by the Malaysian Digital Economy Corporation (MDEC) that is valid between 3 to 12 months and allows for multiple entries.
The application process takes 6 to 8 weeks upon completion of submission and renewal of the pass requires payment of applicable fees in Section C.
Renewal of the pass grants an additional 12 months, allowing total stay up to 24 months.
Q: Is the DE Rantau Nomad Pass transferable to another person?
A: The DE Rantau Nomad Pass is not transferable to another person.
This pass is designed specifically for qualified foreign digital nomads to travel and work in Malaysia, and it can only be applied for by the main pass holder over 18 years of age.
Dependent family members may also apply for the pass, but the main applicant must enter Malaysia first.
The main pass holder is responsible for any dependants who enter Malaysia under their DE Rantau Nomad Pass.
Q: Are there any restrictions on the type of freelance work I can do in Malaysia?
A: The DE Rantau Nomad Pass allows qualified foreign digital nomads to travel and work in Malaysia. The pass is open for application for citizens of all nationalities, with the main pass holder required to be over 18 years old.
Regarding restrictions on freelance work, applications are made online through which applicants must submit documents to prove that they are a digital freelancer or remote worker earning more than USD24,000 per annum. Depending on the type of profession, applicants may need to provide contracts or purchase orders, an active employment contract with a non-Malaysian company or proof of income generated from a digital content platform.
Q: Are there any restrictions on the length of stay for DE Rantau Nomad Pass holders?
A: The DE Rantau Nomad Pass offers holders a Professional Visit Pass (Pas Lawatan Ikhtisas) that is valid for 3 to 12 months of stay, with the option to renew for additional 12 months, allowing up to 24 months of stay.
The validity of the passport must be more than 14 months upon submission of application. Those who are unable to meet this requirement may need to apply for a new passport before applying for the DE Rantau Nomad Pass.
Multiple entries are allowed and dependents have an option either to enter Malaysia together with main pass holder or individually after main pass holder’s arrival.
Q: How do I apply for the Malaysia Digital Nomad Visa?
A: Applicants can apply for the Malaysia Digital Nomad Visa online through the official website of the Malaysia Digital Economy Corporation (MDEC). The online application process is simple and straightforward, and applicants are required to provide basic personal and professional information as well as supporting documents.
Q: What is the cost to apply for the Malaysian Digital Nomad Visa?
A: The visa application fee for the Malaysia Digital Nomad Visa is RM700, or approximately $170 USD.
Q: When can I apply for the Malaysia Digital Nomad Visa?
A: The Malaysian Digital Nomad Visa application process is set to launch in October 2022. Applications will be accepted online through the MDEC website here: https://mdec.my/
Q: What is the average cost of living in Malaysia for digital nomads?
A: The cost of living in Malaysia is generally quite affordable, particularly in comparison to other Southeast Asian countries. The average cost of living for a digital nomad in Kuala Lumpur is estimated to be around $1000 to $1500 USD per month, including accommodation, food, and transportation.
Q: What are the conditions of the Malaysia Digital Nomad Visa?
A: Holders of the Malaysia Digital Nomad Visa must comply with local immigration laws and regulations, and are not allowed to engage in any illegal or prohibited activities while in the country. They are also required to register with the local authorities within 7 days of arriving in Malaysia, and must maintain valid medical insurance coverage throughout their stay.
Conclusion
In conclusion, the DE Rantau Nomad Pass is a great opportunity for digital nomads to work and travel in Malaysia. It offers multiple entries for up to 24 months, with eligibility requirements based on nationality and age.
The pass also allows access to bank accounts and child education. This program provides an excellent way for digital nomads to experience the culture of Malaysia while working remotely.
With its flexible terms and conditions, it is sure to be a popular choice among digital nomads looking for new opportunities abroad.
