Generally, residence status for tax purposes is based on the number of days spent by the individual in Malaysia and is independent of citizenship.
(Note that spending part of a day in Malaysia counts as being physically present for the whole day - for example, someone who arrives in Malaysia at 11pm and leaves at 3am the next day, will be considered as having stayed in Malaysia for two days).
There are 4 ways in which an individual can qualify as a resident in Malaysia - if he falls in any of these categories he will be a resident, if not he will be a non-resident:
The individual is in Malaysia for 182 days or more in a basis year.
The individual is in Malaysia for less than 182 days in a basis year but the period is linked to another period of 182 days or more consecutively throughout which he was in Malaysia either in the year preceding or immediately following that year of assessment.
Temporary absences allowed are for:
a) absences connected with that individual’s service in Malaysia, such as attending conferences or seminars or study abroad;
b) absences owing to ill-health involving the individual or a member of his immediate family (i.e. parents, spouse and children); and
c) absence in respect of socials visits not exceeding 14 days in the aggregate (social visits include any form of vacation outside Malaysia besides vacation to home country).
The individual is in Malaysia for 90 days (the days need not be consecutive days) or more in a basis year, and in each of any 3 out of 4 years of assessment immediately preceding that particular year of assessment he was either considered resident, or in Malaysia for a period or periods amounting in all to 90 days or more.
The individual is not in Malaysia during the basis year, or he is in Malaysia for less than 90 days, but:
a) he is resident for the immediately following basis year; and
b) had been resident for the 3 immediately preceding basis years.
Under this category, an individual can be a resident in Malaysia even though he might never actually have been in Malaysia at all during that basis year.
Malaysian citizens employed in the public service/statutory authority
A Malaysian citizen is deemed to be resident in Malaysia for a particular year of assessment if:
a) is employed in the public services or service of a statutory authority in Malaysia; and
b) the days he is not in Malaysia in that basis year are by reason of:
(i) having or exercising his employment outside Malaysia; or
(ii) attending any course of study in any institution or professional body outside Malaysia which is fully sponsored by the employer.
The objective of this subsection is to allow public servants to continue to be treated as residents and assessed at a scaled rate rather than the flat rate of 25%.