How to Handle Tax Residency Certificate Requests in Malaysia

If your business hires expatriates or manages staff who travel frequently, you may have heard of the tax residency certificate in Malaysia. It’s a simple document with a powerful role. It confirms Malaysian tax residence, opens the door to Double Tax Agreement benefits, and helps your employees avoid unnecessary tax bills abroad.

What Is a Tax Residency Certificate (TRC) in Malaysia?

A TRC is a formal certificate issued by the Inland Revenue Board (LHDN). It confirms that a person or a company was a tax resident in Malaysia for a specific year of assessment. In cross‑border cases, foreign tax authorities often ask for this document before granting relief under Double Tax Agreements (DTAs).

In short, the TRC is the proof that Malaysia is the country of tax residence for the year stated on the certificate.

Why Is a Tax Residency Certificate Important?

When employees earn or work across borders, they can be taxed in more than one country. A TRC supports claims under Malaysia’s DTAs so the same income does not face tax twice.

Foreign authorities also rely on the TRC when they request confirmation of Malaysian tax residence. Having a clear process around TRCs promotes transparent, compliant handling of international tax matters, especially for expatriates, frequent travellers, and regional roles.

Who Can Apply for a TRC?

A TRC is meant for Malaysian tax residents. For individuals, residence is determined under Section 7 of the Income Tax Act 1967 and is based on days spent in Malaysia, not citizenship.

The straightforward path is present in Malaysia for 182 days or more on a yearly basis. A part‑day counts as a full day. Someone arriving at 11 pm and leaving at 3 am the next day would be counted as having stayed two days.
A shorter period in one year can still qualify if it is linked to a separate period of 182 days or more in the year before or after, with temporary absences permitted for service needs, illness (self or immediate family), or short social visits up to 14 days in total.
Presence of 90 days or more in the current year can qualify if, in any three of the four previous years, the person was either resident or present for at least 90 days in those years.
A person may also be treated as resident in a year with no or minimal days in Malaysia if they are resident in the following year and have been resident in the three years before.

There is also a special rule for Malaysian citizens in public service/statutory authorities who are posted or studying abroad at the employer’s sponsorship; they are treated as residents in the relevant year.

For the tax impact of residence, non‑residents face a 30% flat rate (unless present in Malaysia 60 days or less, in which case they are tax‑exempt), while residents are taxed at normal graduated rates. This difference is one reason employees and employers pay close attention to residence status and TRCs.

How to Apply for a Tax Residency Certificate

From an employer’s point of view, the most common bottlenecks are missing documents and unassessed tax returns. Help your employee prepare in this order:

First, make sure the relevant income tax returns have been filed and assessed by LHDN for the year in question. After that, the employee prepares a formal request, either a letter or the application form provided by LHDN, and compiles the supporting documents. The application is then submitted to the nearest LHDN branch.

Documents Required

Employees should bring:

A copy of identification or passport
Tax return acknowledgment (or EA Form as proof of employment income)
Proof of stay in Malaysia such as entry/exit stamps.
A short letter explaining the purpose, e.g. “to support a foreign tax claim under a DTA”

Costs to get Tax Residency Certificate (TRC) in Malaysia

In many cases, there is no charge, but practices can vary depending on the branch or specific circumstances of the application. For this reason, employers should confirm directly with the LHDN branch handling the request before the employee applies. This avoids confusion and helps with budgeting, especially if the TRC is needed as part of relocation or overseas tax compliance.

How Long Does It Take to Get a TRC?

Once LHDN has received a complete application with all required documents, the TRC is typically processed within 10 to 20 working days.

However, this timeline can stretch if the branch is handling a high volume of cases, such as during peak tax filing periods, or if the officer needs additional information to verify the application.

Employers should advise employees to apply well before any foreign tax deadlines to avoid last-minute issues.

What It Means for Malaysian Businesses

For companies hiring expatriates or managing regional roles, a Tax Residency Certificate Malaysia is often part of the onboarding checklist and the annual tax calendar.

HR can help by tracking travel days, keeping EA Forms ready, and guiding staff on the Section 7 tests. This reduces stress when a foreign tax office asks for proof at short notice.

It also supports tax planning for mobile employees, who might otherwise be treated as non‑resident and face the 30% rate.

FAQs

Can a foreign employee apply for a TRC?

Yes, if they meet Malaysian tax residence rules for the year, based on Section 7 and the day‑count tests described above. Residence is about presence in Malaysia, not citizenship.

How many days must I stay in Malaysia to qualify as a tax resident?

One common path is 182 days or more in a basis year. There are other routes involving linked periods, the 90‑day test with prior‑year history, and a rule that can treat a person as resident even with few or no days if specific conditions are met the year before and after. A part‑day counts as a full day.

Can a TRC be issued retrospectively for previous years?

A TRC confirms residence for a specific past year once the tax return is filed and assessed, and the request is supported. Prepare documents for the exact year needed.

Do I need a TRC every year to claim DTA benefits?

Foreign tax authorities often ask for the certificate for the relevant year. If employees claim treaty relief each year, they should expect yearly requests.

What if my employee has split stays across multiple countries?

Use the tests to evaluate Malaysian residents first, count days, check linked periods, and review the 90‑day rule with prior‑year history. Keep a clear record of travel days and stamps to support the application.

Your Next Hire Could be Just a Click Away!

At AJobThing, we connect you with 5+ million jobseekers in Malaysia, ensuring you hire the best.

Post your job ads today & simplify your hiring process!