Before you start

An honest count of your days in Malaysia, and of the preceding and following years
Records of income, and of foreign tax already paid if you remit foreign income here
A MyTax registration and Tax Identification Number with LHDN

Step-by-step

1
Work out your residency against all four limbs, not just 182 days
The headline test is 182 days or more in a calendar year, but s.7 of the Income Tax Act 1967 has four limbs. A shorter stay can still make you resident if it links to a period of 182 days or more spanning into an adjoining year; presence of 90 days or more counts if you were resident or present 90 days or more in three of the four preceding years; and being resident in the three preceding years plus the following one can also catch you. Ducking under 182 days does not settle the question. Residency is not tied to your visa: a chain of Social Visit Passes can make you resident.
OnlineWho: YouAssess against the calendar yearFree
2
Register for MyTax and get a Tax Identification Number
Register at LHDN's MyTax portal for a TIN, or let your employer register you if you are on an Employment Pass. You need it to file, and increasingly to satisfy banks and other institutions. Even with no Malaysian-taxable income, registering and filing a nil or exempt return keeps your record clean and avoids awkward questions later.
OnlineWho: You (employer often assists)Under an hourFree
3
Understand what actually shelters your foreign income
Since 1 January 2022 foreign-sourced income received in Malaysia is in principle chargeable for residents. What keeps it untaxed in practice is a separate exemption order, the Income Tax (Exemption) (No. 5) Order 2022, P.U.(A) 234/2022, which exempts resident individuals on foreign income received here — except income from a Malaysian partnership — and which Budget 2026 extended to 31 December 2036. The condition is that the income was already subjected to income tax, or its equivalent, in the territory where it arose. There is no de minimis threshold and no requirement that a double-tax agreement exist. Keep evidence of the foreign tax you paid.
OnlineWho: Residents remitting foreign incomeAssess annuallyFree; take advice if the income was untaxed at source
4
File your annual return by the deadline for your income type
Employment income is filed on the e-BE form by 30 April for the preceding calendar year; business and self-employment income is filed on the e-B form by 30 June. Filing is done through the MyTax portal. Employees have tax withheld monthly through the PCB payroll deduction, so most salaried filers reconcile to a small refund rather than a bill. Late payment attracts a penalty plus interest, so file even if you expect nothing to pay.
OnlineWho: All tax residentsBy 30 April (employment) or 30 June (self-employment)Free to file
5
Budget for the local property charges if you buy in Penang
Ownership brings two recurring local charges that have nothing to do with LHDN: assessment rates levied by the local council — MBPP on the island, MBSP on the mainland — and quit rent payable to the state land office. Both are modest by international standards and billed separately from anything federal. If you buy as a foreigner, budget also for the state consent process and, on the island, a levy calculated on the purchase price.
In personWho: Property ownersAssessment rates are billed in instalments through the year; quit rent annuallyModest annually; the foreign-buyer levy is a one-off at purchase

Documents you’ll need

Tax Identification Number and MyTax credentials
EA form from your employer, or invoices and bank statements if self-employed
Evidence of foreign tax paid on any income remitted into Malaysia
Receipts for reliefs you intend to claim
Property assessment and quit rent notices, if you own

Things most newcomers don’t know

Penang does not tax your income — but it does tax your property, and one of those charges applies only to foreigners buying on the island.

Income tax is entirely federal; there is no Penang income tax and no Penang tax adviser is a different profession from a Kuala Lumpur one for that purpose. Property is where the state and the local councils actually reach you: assessment rates from MBPP or MBSP, quit rent from the state land office, and — for foreign buyers of island property — a levy calculated on the purchase price on top of the state consent process. That levy is a real number on an island purchase and is frequently omitted from budget spreadsheets built from national guides.

Source: Penang state land administration; MBPP/MBSP assessment rates

The exemption that keeps your foreign income untaxed is conditional, and the condition is one nomads often fail.

P.U.(A) 234/2022 exempts a resident individual's foreign-sourced income received in Malaysia, but only where that income was already subjected to income tax, or its equivalent, in the territory where it arose. A freelancer invoicing from a jurisdiction that taxed nothing has not obviously met that condition. There is no RM 100,000 de minimis and no double-tax-agreement requirement — both are widespread online myths. Keep foreign tax certificates, and take advice if your income was genuinely untaxed at source.

Source: Income Tax (Exemption) (No. 5) Order 2022, P.U.(A) 234/2022; LHDN foreign-income guidelines

The DE Rantau pass confers no tax exemption of its own — and people plan around one that does not exist.

It is widely repeated that Malaysia's nomad visa comes with a tax carve-out. It does not. What shelters foreign income is the general exemption order, which applies to Employment Pass holders, MM2H holders and DE Rantau holders alike on identical conditions. Getting this right matters because the conditions attach to the order, not to your visa — so holding the pass proves nothing about your tax position, and losing it changes nothing either.

Source: MDec DE Rantau terms; LHDN foreign-income treatment

Foreign-buyer minimum prices are set by the state, and Penang's are among the highest in Malaysia.

National guides quote a single Malaysian threshold, which does not exist — each state sets its own, and Penang distinguishes both between the island and the mainland and between stratified and landed property, with landed property on the island set at a multiple of the stratified floor. The result is that budgets built from a national figure are often far short of what actually qualifies here. Confirm the current thresholds and the island levy with a Penang conveyancing lawyer before you commit to a purchase or to an MM2H tier that requires one.

Source: Penang state foreign-buyer thresholds; state consent requirement

Common mistakes to avoid

Treating 182 days as the whole residency test — s.7 has four limbs and three of them can catch a shorter stay
Assuming the DE Rantau pass carries its own tax exemption; the shelter is a general exemption order with its own conditions
Relying on a supposed RM 100,000 de minimis for foreign income, which does not exist
Budgeting a Penang property purchase against a national foreign-buyer threshold rather than the state's own, higher figures plus the island levy
Not registering for a TIN because you have no Malaysian income, then needing one at short notice for a bank or a property transaction

Some of this may be out of date. Spotted something inaccurate? Help us keep it right for the next newcomer.