Banking, Money and Taxes in Malaysia
The Malaysian banking system is well established. Although opening a bank account can be complicated for foreigners, particularly if they don't have the correct visa or work permit, once they have opened an account, banking in Malaysia can be easy and hassle-free for expats.
Money in Malaysia
The currency in Malaysia is the Malaysian Ringgit (MYR), divided into 100 sen (cents).
Notes: 1 MYR, 5 MYR, 10 MYR, 20 MYR, 50 MYR and 100 MYR
Coins: 5 sen, 10 sen, 20 sen and 50 sen
Banking in Malaysia
Although many expats prefer to bank with a foreign bank, such as Bank of America or HSBC, as they can link to their account in their home country, there are numerous local banking options available to expats in Malaysia. The central bank is Bank Negara Malaysia, while local banks include Bank Islam Malaysia, Bank Muamalat Malaysia, CIMB Bank, Public Bank Berhad and RHB Bank.
Once an expat has an account, banking becomes simple. Malaysian banks have all the services customers have come to expect, including internet and mobile banking.
Banking hours are generally Monday to Friday, 9.30am to 4pm, and Saturdays from 9.30am to 11.30am.
Opening a bank account
Expats wishing to open a bank account in Malaysia with a local bank will need a valid work permit. Without this, it is almost impossible to open an account. New customers are generally required to provide their ID or passport, and evidence of residency or employment status, such as a work visa or letter of employment. Recent bank statements and a letter of recommendation from their current bank may also prove helpful.
Credit and debit cards are widely accepted in Malaysia. However, cash payments are still more popular in many establishments. Expats should be vigilant when using their credit or debit cards and should check their till slips carefully. Credit card fraud remains a problem in Malaysia, with the country experiencing some of the highest rates of this crime in the world.
ATMs are widely available, some of which accept foreign credit and debit cards. Cash will be dispensed in ringgit. Expats should note that some ATMs close at midnight.
Taxes in Malaysia
With a relatively low income tax rate and few other taxes, Malaysia is an incredibly tax-friendly country. Malaysian tax law divides potential taxpayers into three categories: residents, non-residents and pensioners.
Residents are those who have stayed in the country for longer than 182 days. People who fall into this category are liable to pay income tax. The income tax rate varies according to the amount of income. There are a number of different tax groups, ranging from 0 to 28 percent.
Non-residents, or those that stay in Malaysia for less than 182 days, are taxed at a flat rate of 28 percent.
The third group consists of people over the age of 55 years who are employed in Malaysia for less than 60 days in a year. People in this group either receive a Malaysian pension or live on interest from banks. People in this group are exempt from paying tax.
Many expats choose to go to Malaysia under the Malaysia My Second Home (MM2H) programme. These expats are required to pay tax on any income made in Malaysia. However, they are not required to pay tax on income or pension funds generated abroad.
Malaysia has tax agreements with a number of countries in order to avoid foreigners having to pay double taxation. Expats should investigate whether Malaysia has such an agreement with their home country.