Key Criteria of the PVIP

We summarize the key requirements that an applicant for the PVIP must meet, as follows:

Permitted Activities for Participants

Each successful applicant are permitted to undertake the following in Malaysia:

1. education;
2. employment;
3. business;
4. acquisition of real estate for residential, commercial or industrial purposes; and
5. investments in permitted industries.

Malaysian Tax Considerations for Participants

The Malaysian income tax rates imposed on participants vary depending on whether they are a Malaysian tax resident. Tax residency in Malaysia is determined by the length of physical stay in Malaysia. A participant would be considered a Malaysian tax resident for that particular year of assessment ("YA") if he or she were physically in Malaysia for:

1. 182 days or more in a year;
2. less than 182 days in a year ("short period"), and this short period is linked to another period of 182 days or more in the following or preceding YA;
3. 90 days or more in a year, and (a) stayed more than 90 days; or (b) is a resident, for 3 out of the 4 years preceding the YA in question; or
4. any amount of days in a year, and (a) was resident for the 3 Yas immediately preceding that YA in question; and (b) is resident for the immediate following YA.

If a participant satisfies any of the four (4) options above, he or she would be considered a Malaysian tax resident and his or her income would be subjected to a graduating income tax scale of 0%-30%. A Malaysian individual tax resident is able to avail himself or herself of a tax exemption on foreign sourced income that is received in Malaysia, provided certain conditions are met. This tax exemption is available until 31 December 2026.

If a participant is a non-resident, a flat income tax rate of 30% will apply. Non-residents are not subjected to Malaysian income tax on foreign income that is received in Malaysia. Additionally, a tax exemption is also available for non-resident who exercises employment in Malaysia, provided that the individual is physically in Malaysia for a period not exceeding 60 days in a calendar year.

What This Means For You

The new PVIP is intended to attract higher-quality, financially stable applicants to invest in Malaysia and potentially make Malaysia their second home. Interested applicants are advised to review the criteria carefully to assess if the PVIP is available to them.

Additionally, interested applicants should be aware of the Malaysian tax implications on obtaining tax residency in Malaysia. It is also advisable to seek advice from professionals as to the cross border tax implications of possible migration overseas, and strategies to efficiently manage such tax exposure.

With proper planning and advice, migrating to Malaysia or making the country a second base can be attained and we are well-placed to assist you in advising and navigating the complex tax landscape.

1 Such as spouse, children, parents, parents-in-law and domestic helpers.

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This client alert was issued by Wong & Partners, a member firm of Baker McKenzie International, a global law firm with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner or equivalent in such a law firm. Similarly, reference to an "office" means an office of any such law firm. This may qualify as "Attorney Advertising" requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.