Banking, Money and Taxes in Malaysia
The Malaysian banking system is well-established, making banking in Malaysia easy and hassle-free once you have opened your account. Opening an account can be complicated for expats, particularly if one does not have the correct visa or work permit.
Many expats prefer to bank with either Bank of America or HSBC, as they can link it to their account in their home country. Another advantage of using such international banks is that an account can be opened up before arrival in Malaysia. This choice means that the account is set up from outside the country, and gives the client access to services such as an offshore account as well as online banking in a currency of your choice.
Once you have an account, banking becomes a breeze. Malaysian banks have all the services customers have come to expect, such as Internet and mobile banking. Most banks have ATMs available, however most ATMs close at midnight.
Expats wishing to open a bank account in Malaysia 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, evidence of residency or employment status such as a work visa or letter of employment. Recent bank statements and a letter of recommendation from your current bank may also prove helpful.
The currency in Malaysia is the Malaysian Ringgit (MYR), divided into 100 sen (cents). The coins range from 1 sen to 50 sen and notes are available in various denominations from RM1 through to RM100.
Malaysia’s steady economic growth and the government’s regular intervention in the exchange rate have allowed the currency to maintain a fair amount of financial stability. Following the Asian financial crisis in 1997, Malaysia pegged its currency at RM3.8 to the US Dollar until July 2005, when the Bank Negara allowed the ringgit to operate within a ‘managed float’ against some of the world’s major currencies. This state intervention does mean that expats are able to trust that the money they earn will not drastically devalue should the world markets undergo a drastic shake-up.
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.
Many expats choose to go to Malaysia under the Malaysia My Second Home (MMSH) 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. The full list of countries and agreements is available from the Inland Revenue Board on Malaysia’s website.
Banking
Many expats prefer to bank with either Bank of America or HSBC, as they can link it to their account in their home country. Another advantage of using such international banks is that an account can be opened up before arrival in Malaysia. This choice means that the account is set up from outside the country, and gives the client access to services such as an offshore account as well as online banking in a currency of your choice.
Once you have an account, banking becomes a breeze. Malaysian banks have all the services customers have come to expect, such as Internet and mobile banking. Most banks have ATMs available, however most ATMs close at midnight.Expats wishing to open a bank account in Malaysia 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, evidence of residency or employment status such as a work visa or letter of employment. Recent bank statements and a letter of recommendation from your current bank may also prove helpful.
Money
The currency in Malaysia is the Malaysian Ringgit (MYR), divided into 100 sen (cents). The coins range from 1 sen to 50 sen and notes are available in various denominations from RM1 through to RM100.
Malaysia’s steady economic growth and the government’s regular intervention in the exchange rate have allowed the currency to maintain a fair amount of financial stability. Following the Asian financial crisis in 1997, Malaysia pegged its currency at RM3.8 to the US Dollar until July 2005, when the Bank Negara allowed the ringgit to operate within a ‘managed float’ against some of the world’s major currencies. This state intervention does mean that expats are able to trust that the money they earn will not drastically devalue should the world markets undergo a drastic shake-up.
Taxes
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 considered residents and are liable to pay income tax. The income tax rate varies according to amount of income, there are eight different tax groups, ranging from 0% to 26%.
- Non-residents, or those that stay less than 182 days, are taxed on a three-step tax rate, with taxation amounts of 10%, 15% and 27%.
- The third group consists of people who are employed in Malaysia for less than 60 days in a year. People in this group are over the age of 55 years, and 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 (MMSH) 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. The full list of countries and agreements is available from the Inland Revenue Board on Malaysia’s website.
