LABUAN EXPATRIATE PERSONAL TAX CLEARANCE GUIDE

Directors and expatriates who have personal tax (SG No) files can apply to close their account with the Inland Revenue Board of Malaysia (IRB) at any time as long as they have submitted their latest tax assessment for the previous year with complete tax information and payments up-to-date. The current year assessment will be required to be submitted during the closure application. You can either apply to close your tax account at any IRBM branches in Kuala Lumpur or Labuan or ask for our service to assist.

Before an expatriate initiates the application with the Inland Revenue Board (IRB) to have his/ her personal tax (SG No) file clearance, it is advisable for the expatriate to determine his/ her intention based on the category he/she falls into and apply for the personal tax closure accordingly to avoid any penalties/ fines. The three (3) categories are as follows:

CATEGORY 1: Expatriate Remains As An Active Director

This category applies to Directors who have ceased his/ her work permit and no longer receive income from Malaysia but remains active as Directors of the Labuan company.

IRB processing time is approximately 2 to 3 weeks. After tax clearance is approved, the expatriate may apply to close the tax account. 

CATEGORY 2: Expatriate who has Resigned and is Leaving Malaysia

Directors and/ or high-level management staff who cease to hold work permits, has resigned and is leaving Malaysia permanently.

IRB processing time is approximately 2 to 3 weeks. After tax clearance is approved, the expatriate may apply to close the tax account.

CATEGORY 3: Company Ceased Business

This category applies to Directors whom previously or is currently holding work permits attached with the Labuan Company and is intending to close/ dissolve the Labuan Company.

Need to apply to close your personal tax account once the Labuan company permanently ceases business with proof of the company’s struck-off notice or dissolution certificate issued by Labuan FSA. 

IRB processing time is approximately 2 to 3 weeks. After tax clearance is approved, the expatriate may apply to close the tax account.

Regardless of the categories that the expatriate may fall under, it is important to obtain personal tax clearance as part of proper departure out of Malaysia. The Labuan Immigration only processes work permit cancellation/ termination and data clearance upon the receipt of Inland Revenue’s tax clearance letter. This is an important step to avoid any future immigration issues when entering in and out of Malaysia.

How to Apply for Personal Tax Clearance

The first step to getting started to apply for personal tax clearance with the Inland Revenue Board (IRB) requires the submission of five (5) main documents which are:

1. Full set of current passport copy
2. Fully completed Form CP 21A or CP 22A depending on the tax profile of the expatriate
3. Listing of your travel schedule – in and out of Malaysia from day one the work permit was issued
4. Latest tax assessment
5. Flight tickets to depart Malaysia

Upon the issuance of tax clearance letter from Inland Revenue Board (IRB), the expatriate may then apply to close his/ her personal tax (SG No) file. All expatriates of the above categories and those with existing personal tax files must continue to comply with the yearly tax assessment filing to Inland Revenue Board (IRB) by 30 April each year to avoid any penalty/ fine for non-compliance and future complications with Immigration Department. Yearly filing will not be required once the personal tax file is duly closed.

All of the above applications are subject to IRB’s sole discretion for approval. For more information, please visit www.hasil.gov.my.

Should you require assistance and more information on the closure of your personal tax file, please feel free to drop us an email at contact@labuanbusiness.com.


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