Moving from Malaysia Tax Guide 2026: LHDN Departure, EPF Withdrawal & MM2H Visa Exit

KEY INSIGHT

Malaysia does not impose an exit tax on departing residents. Malaysian income tax reaches 30% on the progressive scale. Non-citizen EPF (Employees Provident Fund) members can make a full withdrawal of their EPF balance upon permanent departure from Malaysia — a significant benefit compared to many other countries' pension systems. Malaysian Real Property Gains Tax (RPGT) applies on property sales based on the holding period — 30% in year 1, tapering to 5% from year 6. MM2H visa holders who depart lose their visa status but retain property rights.

At a glance

Key Facts

Malaysian Income Tax Rates, Territorial System, and Residency

Malaysian individual income tax (Cukai Pendapatan) progressive rates (2026): 0% (up to MYR 5,000), 1% (MYR 5,001–20,000), 3% (MYR 20,001–35,000), 8% (MYR 35,001–50,000), 13% (MYR 50,001–70,000), 21% (MYR 70,001–100,000), 24% (MYR 100,001–400,000), 24.5% (MYR 400,001–600,000), 25% (MYR 600,001–2,000,000), 30% (above MYR 2,000,000). Tax-free threshold: effectively MYR 5,000 before PIT applies. Territorial system: Malaysia taxes only Malaysian-source income for both residents and non-residents. Foreign-source income remitted to Malaysia: generally exempt from Malaysian income tax (with very limited exceptions introduced from 2022 for certain investment holding companies — not applicable to most employed individuals). Tax residency: Malaysian tax residency is established if you are physically present in Malaysia for 182+ days in a calendar year. Residency status affects only the tax rates and certain rebates available — it does not affect the scope of income taxed (Malaysia taxes all residents and non-residents on Malaysian-source income only). Non-residents: flat 30% on Malaysian employment income (or DTA rate). No progressive rates for non-residents on employment income — this can be disadvantageous for short-stay non-residents. Special status: MM2H, digital nomad, and certain knowledge worker visa holders may qualify for concessionary rates.

EPF (Employees Provident Fund): Full Withdrawal for Non-Citizens

EPF (Kumpulan Wang Simpanan Pekerja — KWSP) is Malaysia's mandatory defined contribution pension scheme. Employee contribution: 11% of monthly salary (option to reduce to 9% — employee choice). Employer contribution: 12%–13% (depending on age). Total contributions: substantial accumulation over employment tenure. For non-Malaysian citizens permanently departing Malaysia: FULL EPF WITHDRAWAL is available. This is one of the most generous departure provisions in Asia — unlike many countries that freeze pension funds until retirement age. Eligibility for full withdrawal: (1) Non-Malaysian citizen. (2) Permanently leaving Malaysia (non-intention to return as a Malaysian resident). (3) Alternatively: reaching age 50 (partial withdrawal) or age 55 (full withdrawal regardless of citizenship). How to apply: visit an EPF branch with: passport, work visa/permit, letter of resignation or termination from Malaysian employer, statutory declaration of permanent departure. Processing: 7–14 working days. Payment: MYR bank transfer (to Malaysian account, then transfer abroad) or directly to foreign bank account for eligible cases. Tax on EPF withdrawal: EPF withdrawals are generally NOT subject to Malaysian income tax regardless of the amount — a significant benefit. The EPF contributions were made from gross salary (pre-tax for employee portion), but withdrawals are tax-free. Foreign bank transfer: after receiving EPF proceeds to your Malaysian bank account, transfer abroad via Wise (competitive MYR rates) or your Malaysian bank's international transfer service.

Malaysian Real Property Gains Tax (RPGT) and Departure Planning

Malaysian RPGT (Cukai Keuntungan Harta Tanah) applies to gains on disposal of Malaysian real property. RPGT rates (for individuals, including non-citizens): Within 3 years of acquisition: 30% on net gain. Year 4: 20%. Year 5: 15%. Year 6 onwards: 5% for Malaysian citizens and permanent residents; 10% for non-citizens. Exemptions: each individual is entitled to one lifetime RPGT exemption for disposal of a private residence (the 'once in a lifetime' exemption). Exemption applies only if the property was used as the primary residence and certain conditions are met. Non-resident sellers: the acquiring party (buyer) must withhold 3% of the purchase price and remit to LHDN (Inland Revenue Board — Lembaga Hasil Dalam Negeri) within 60 days of disposal — even if no actual gain exists. The seller then files a RPGT return to calculate actual RPGT and claim any refund of excess withholding. Departure planning: if you plan to sell your Malaysian property, time the sale after the 6-year threshold to minimise RPGT (5%/10% vs 30% within 3 years). If you must sell earlier, factor the RPGT cost into pricing. Property retained after departure: as a non-resident, you can retain Malaysian property indefinitely. You will owe RPGT on eventual sale and any rental income is taxable in Malaysia via withholding or declaration.

MM2H Visa: Tax and Departure Implications

MM2H (Malaysia My Second Home) is a long-stay visa programme allowing foreigners to live in Malaysia for 5–10 years (revised programme as of October 2021): fixed deposit requirement MYR 500,000 (younger applicants) or MYR 1,000,000 (retirees and applicants above 60); monthly offshore income requirement MYR 40,000; property purchase requirement. MM2H holders and Malaysian tax: MM2H visa holders working in Malaysia: standard Malaysian income tax applies on Malaysian-source income. MM2H holders with foreign-source income only: foreign income is exempt from Malaysian tax under the territorial system — MM2H is popular precisely because foreign pension or investment income is untaxed in Malaysia. On departure from Malaysia — MM2H implications: (1) MM2H visa is cancelled or lapses on departure. (2) The fixed deposit (held in a Malaysian bank) is released — you can close the account and transfer proceeds internationally. (3) If you purchased Malaysian property under MM2H: you retain ownership as a non-resident. Property transfer to non-MM2H non-residents: no restriction on non-residents retaining Malaysian property. (4) Rental income from retained Malaysian property: 26% withholding (non-resident rate) on gross rental from Malaysian tenants. (5) Future return to Malaysia: MM2H is not renewable once cancelled — you would need to reapply under the current programme rules if returning.

SOCSO and LHDN Departure Procedures

SOCSO (Social Security Organisation — PERKESO): Malaysian employment injury and invalidity scheme. Employee contribution: 0.5% of salary. Employer: 1.75%. SOCSO contributions are NOT refundable on departure — they fund Malaysia's social security benefit pool. Benefits end on cessation of Malaysian employment. LHDN (Lembaga Hasil Dalam Negeri — Inland Revenue Board) departure procedures: (1) File final Malaysian income tax return (Borang BE for employment income or Borang B for business income) for the full calendar year of departure. Malaysian tax year: calendar year (January–December). Filing deadline: April 30 (BE) or June 30 (B) of the following year. Electronic filing via e-Filing portal (lhdn.hasil.gov.my). (2) Tax clearance (Surat Penyelesaian Cukai): required for foreign nationals on departure. The employer must apply for the employee's tax clearance letter from LHDN before or on the date of departure — the employer must withhold the employee's final salary until tax clearance is obtained. This is a legal requirement for foreign nationals. (3) Malaysian income tax number (No. Cukai Pendapatan): remains registered unless formally cancelled. Keep active if you retain Malaysian income-generating assets. (4) Employment permit cancellation: work permit must be cancelled by the employer at Jabatan Imigresen Malaysia (Immigration Department) before the employee's departure.

Introduction

Malaysia has long attracted expatriates with its low tax rates, affordable cost of living, and the MM2H (Malaysia My Second Home) long-stay visa programme. Malaysia's tax system is territorial — only Malaysian-source income is taxed — making it already favourable for residents with foreign-source income. Departure planning centres on the EPF full withdrawal option for non-citizens (one of the most generous pension exit provisions in Asia), the RPGT property gains tax schedule, and MM2H visa planning.

Section 01

Moving from Malaysia to Australia or the UK

Key considerations for Malaysian residents moving to Australia or the UK:

Australia: The Malaysia-Australia DTA (1980) governs double tax relief. Malaysian dividends paid to Australian residents: 15% withholding (dividends from Malaysian companies). EPF withdrawal received in Australia: under the DTA pension article, Malaysian pensions/provident fund distributions paid to Australian residents may be taxable in Australia (as foreign pension income on your Australian return) — claim DTA credit for any Malaysian withholding. RPGT: Malaysia can tax Malaysian property gains regardless of the seller's residency under the DTA immovable property article.

UK: The Malaysia-UK DTA (1973, revised) covers cross-border income. UK residents with Malaysian rental income: taxable in Malaysia (source) AND UK (residence) — FTC available on UK return. Malaysian EPF pension receipts to UK residents: assessed under DTA pension article — typically taxable only in the UK.

ATO superannuation and EPF: If you receive your EPF withdrawal as an Australian tax resident: the amount may be assessable as a foreign super/pension payment in Australia (at your marginal rate). Timing the EPF withdrawal before establishing Australian tax residency may be advantageous — seek advice from an Australian international tax specialist.

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FAQ

Frequently Asked Questions

How do I withdraw my EPF as a non-citizen leaving Malaysia?

Non-citizen EPF withdrawal process: (1) Visit any EPF (KWSP) branch in Malaysia with: original passport (all pages); work visa or employment pass (original); resignation letter or termination letter from your Malaysian employer; statutory declaration (akuan bersumpah) that you are permanently leaving Malaysia — sworn before a Commissioner for Oaths in Malaysia (found at most legal firms or the EPF office itself). (2) Complete EPF Form KWSP 9C (AHL) — the specific withdrawal form for non-citizens permanently leaving Malaysia. (3) Provide Malaysian bank account details for payment. (4) Processing: typically 7–14 working days. EPF mails a confirmation before processing the payment. (5) After receiving the EPF funds in your Malaysian bank: transfer internationally via Wise (competitive MYR/AUD, MYR/GBP, MYR/USD rates) or your Malaysian bank's SWIFT transfer. Important: this full withdrawal option is not available if you: are a Malaysian permanent resident (PR) — PRs can only withdraw at 50/55 years old; or if you have previously made a withdrawal under this category. The full non-citizen withdrawal is a one-time event. Retain the EPF withdrawal confirmation and bank receipt — needed for foreign country tax reporting (many countries treat this as foreign pension income).

Do I need a tax clearance letter from LHDN before I leave Malaysia?

Yes — if you are a foreign national (non-Malaysian citizen) working in Malaysia on an employment pass, expatriate pass, or similar work authorisation: your employer is legally required to apply for a tax clearance letter (Surat Penyelesaian Cukai) from LHDN before your departure. The employer must: (1) Submit Form CP21 (Notification by Employer of Departure of Employee from Malaysia) to LHDN at least 30 days before the departure date (or immediately upon notice of departure if less than 30 days). (2) Withhold all salary, bonuses, and other payments until LHDN issues the tax clearance letter. (3) Remit any outstanding tax from the withheld amounts. (4) Release the balance of withheld salary to you once the tax clearance letter is received. The tax clearance letter confirms all Malaysian income tax obligations are settled. Without it: your employer may face penalties from LHDN. For Malaysian citizens or PRs: the tax clearance requirement is not mandatory but remains advisable to confirm no outstanding tax liabilities before departure. Filing after departure: even with a tax clearance, file your annual Borang BE for the departure year by April 30 of the following year — this is the definitive settlement of your Malaysian tax obligations.

Can I keep my Malaysian bank account after I move abroad?

Yes — Malaysian banks (Maybank, CIMB, Public Bank, Hong Leong, RHB, etc.) allow non-residents to maintain accounts. Update your account status to non-resident at your bank. Anti-money laundering: Malaysian banks apply Bank Negara Malaysia (BNM) AML/KYC requirements — you may need to update your identification documents and provide foreign address. Interest rates: Malaysian ringgit fixed deposit rates are relatively attractive (3%–4% for MYR fixed deposits in 2026). Foreign currency accounts: Malaysian banks also offer foreign currency fixed deposit accounts (USD, GBP, EUR, AUD). Ringgit international transfers: BNM regulations govern large MYR international transfers. Transfers above MYR 200,000 may require documentation of the source of funds. Wise: competitive MYR conversion rates for international transfers vs Malaysian bank SWIFT fees. CRS reporting: Malaysian bank accounts are reportable under the CRS (Common Reporting Standard) to your new country of residence — the account balance will be automatically reported to your new country's tax authority. Declare the account in your new country's foreign account reporting requirements (e.g., FBAR if moving to the USA, Schedule B if filing US returns).

I have a Malaysian property — what are my RPGT obligations as a non-resident?

As a non-resident seller of Malaysian property: (1) RPGT rate: 5% (after holding 6+ years) or 10% (after 6+ years for non-citizens/non-residents) or 15%–30% for shorter holding periods. Check your acquisition date carefully. (2) Withholding by buyer: the buyer must withhold 3% of the consideration price and remit to LHDN within 60 days of the sale/transfer. This withholding is a pre-payment of estimated RPGT — not the final tax. (3) RPGT return: you must file a Return of Acquisition/Disposal (CKHT 1A) within 60 days of the disposal. LHDN then calculates the actual RPGT. If actual RPGT is less than the 3% withheld: you receive a refund. (4) Exemption: the one lifetime private residence exemption may be available if you owned and used the property as your primary residence and haven't used the exemption before. Non-residents can claim this — but eligibility requires the property to have been the actual primary residence. (5) Property agent: engage a licensed Malaysian real estate agent (REN) and lawyer for the sale — the lawyer handles LHDN reporting obligations as part of the conveyancing. (6) Power of attorney: you can appoint a Malaysian solicitor or trusted person via a Notarised and Apostilled Power of Attorney from your current country to sign the sale and purchase agreement on your behalf.

Disclaimer:This guide provides general tax information for educational purposes only. Malaysian income tax rules, EPF withdrawal procedures, RPGT rates, and MM2H requirements change with Malaysian legislation and LHDN/EPF administrative guidance. Nothing in this guide constitutes tax or legal advice. Consult a Malaysian tax agent (Ejen Cukai) or chartered accountant before departing Malaysia.

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