6th April 2026 - 8 min read
Remote work has changed a lot about how Malaysians earn a living. Plenty of people now hold jobs with companies in Singapore, the UK, Australia, or the US, all while sitting at home in Petaling Jaya or Penang. The salary comes in a different currency, there’s no EPF contribution from the employer, and nobody from LHDN has knocked on the door.
Yes. If you live and work in Malaysia, your income is taxable here, regardless of where your employer is based or what currency your pay comes in.
LHDN taxes income based on where the work is done, not where the company is registered. It does not matter that your salary comes in AUD or that it lands in an overseas bank account.
If you are in Malaysia for 182 days or more in a calendar year, you are a tax resident. That is roughly six months. For someone working a regular remote job from home, this is almost never an issue.
If you are a non-resident, you are taxed at a flat 30% on all income with no reliefs at all, so it is worth knowing which category you fall into. Do note that the 182-day count applies to each year separately, so a year with extended overseas travel could affect your status for that particular year.
In 2022, Malaysia changed its rules on what is called foreign-sourced income (FSI). Before that, money earned abroad and brought into Malaysia was generally not taxed. After 2022, it became potentially taxable. This understandably caused concern among people earning from overseas employers.
FSI refers to money that originates from outside Malaysia, such as dividends from foreign shares, rental income from a property abroad, or interest from an overseas bank account. Passive income, in other words.
Employment income is treated differently. LHDN draws a clear line here. If you are physically in Malaysia doing your job, the income you earn is Malaysian-derived employment income, not foreign-sourced income. The distinction is important because Malaysian-derived employment income is simply taxable as normal. It does not fall under the FSI rules at all.
Put plainly, the FSI exemption is not a loophole for remote workers. Your salary is taxable in Malaysia because you earned it here, regardless of where your employer is based or where the money is sent.
The process is similar to filing as any other salaried employee, with a few practical differences.
Since your employer is not registered in Malaysia, you will not receive an EA Form. An EA Form is the document Malaysian employers give their employees each year that summarises total salary paid and tax deducted. Without one, you will need to work out your total income for the year yourself and enter it manually.
The form you use depends on your situation. If your only income is from your remote job, you file Form BE. If you also earn income from a registered business or freelance work declared as a business source (for example, as a sole proprietor registered with SSM), you file Form B instead.
For the income amount, you convert each month’s salary into Ringgit using the exchange rate for that month, then add it up for the year.
If you were paid monthly, use the rate applicable to each month. Keep your payslips, bank statements, and a record of the exchange rates you used, as LHDN may ask to see these if your return is ever reviewed.
You declare the income under the employment income section of the form, the same section any regular salaried employee would use. If you are not sure exactly where to find this in the e-Filing portal, our step-by-step guide to e-Filing walks through each screen in detail.
This is where a Double Tax Agreement (DTA) may come in, and it is really only relevant if your employer’s country has already withheld tax from your pay.
A DTA is a treaty between two countries to make sure the same income does not get taxed in full by both. Malaysia has comprehensive DTAs with many countries, including Singapore, the UK, Australia, Japan, and Germany. The United States, however, does not have a comprehensive DTA with Malaysia, as the existing agreement is limited in scope and does not generally cover employment income.
If tax was already deducted at source by your employer’s country, you may still be able to claim a credit in Malaysia for that amount, either under a relevant DTA or through unilateral tax relief, so you are not paying tax twice.
That said, many foreign companies paying remote workers in Malaysia do not deduct any tax at all, since they have no presence here and the worker is not based in their country. If that is your situation, there is no foreign tax to offset and you simply pay Malaysian tax as normal.
If your employer has been deducting tax and you think a DTA applies to you, speak to a licensed tax professional before claiming credits. The rules are specific to each treaty and worth getting right.
Yes, fully. Being paid by a foreign employer does not affect your entitlement to personal tax reliefs as a Malaysian tax resident.
You can claim the personal relief of RM9,000, lifestyle reliefs, medical reliefs, relief on insurance premiums, relief on education fees, and the full range of reliefs available to any resident individual. These reliefs reduce your chargeable income.
Your foreign employer is not registered with EPF or SOCSO, so there will be no employer contribution to your EPF account and no SOCSO coverage under your employment. This is a gap compared to working for a local employer, but it is not illegal. EPF and SOCSO obligations apply to Malaysian-registered employers. Foreign employers operating outside Malaysia are not within the scope of those laws.
Regarding EPF, the good news is that you can contribute voluntarily. EPF has a scheme called i-Saraan specifically for those without a contributing employer. Any voluntary EPF contributions you make can be claimed as a tax relief, with a maximum cap of RM7,000 per year.
For SOCSO, the voluntary self-employment scheme (Skim Perlindungan Sosial Pekerjaan Sendiri) is available to the self-employed. If you are employed by a foreign company rather than running your own business, this may not directly apply to you. It is worth checking the latest eligibility criteria on the PERKESO website if SOCSO coverage is something you want.
The first thing to do is not panic, but also not to keep ignoring it.
LHDN runs on a self-assessment system, which means the responsibility for filing accurately and on time falls on you. If you have missed years, you can still file back returns and settle outstanding tax. Voluntary disclosure before LHDN comes to you generally results in lower penalties than waiting to be found out.
The longer you leave it, the more complicated it gets. If the amounts involved are significant or the gap spans several years, get advice from a licensed tax agent or chartered accountant before filing anything retrospectively.
You still need to declare it.
It does not matter where your salary lands. If the work was done in Malaysia, the income is taxable in Malaysia. Leaving it in a foreign account does not change that.
Working remotely for a foreign company does not put you outside the Malaysian tax system. Your process is largely the same as any other salaried employee, except that you will need to do more of the legwork yourself since there is no EA Form and no employer handling your PCB. For anything involving a double tax agreement or back returns, speak to a licensed tax agent before you file.
For a full breakdown of what you can claim to reduce your tax bill, read our guide on Malaysian income tax reliefs, rebates, and deductions. If you also have freelance clients on the side, our guide on tax for freelancers covers that separately.
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Pugaleshwaran Raja Kumaran is a Tax Executive Director at ThinkTX Consultants, with over a decade of experience delivering strategic and practical tax solutions. He advises high-net-worth individuals, multinational corporations, and growing businesses, helping them manage complex tax matters with clarity and confidence.
He has extensive experience across a broad range of tax engagements, including corporate tax compliance, Capital Gains Tax (CGT), withholding tax, stamp duty, Real Property Gains Tax (RPGT), Sales and Service Tax (SST), and advisory on inbound and outbound investments. He also leads practice areas covering tax incentives, tax audits and investigations, private client advisory, tax due diligence, and e-Invoicing advisory, providing comprehensive support across the business life cycle.
Beyond client advisory, Pugaleshwaran actively contributes to the tax profession through writing and speaking on Malaysian tax policy, regulatory developments, and industry best practices. His work has been published by the International Bureau of Fiscal Documentation (IBFD) and Wolters Kluwer (CCH), including contributions to Malaysia’s Sales and Service Tax (SST) content updates.
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As a trusted tax partner of RinggitPlus, Pugaleshwaran reviews and verifies Malaysian taxation content to ensure it is accurate, compliant, and relevant for everyday Malaysians.
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