e-migrator

TJD, thank you for your long reply. What your favorite is depends on your criteria and how you weigh them. You are of course absolutely right that no spreadheet could ever replace a personal stay. But then mine was not meant to. It was merely the first step. The second is to visit the shortlisted places and get to know them first-hand.

As far as taxes are concerned, your lines confirm my impression that what I am doing would be taxable under the MM2H scheme. I am indeed a short-term day trader (even though I can enter my orders before or after regular trading hours), and I make rather a lot of trades, short and long, often involving leveraged instruments. And no, I do not have any other source of income. But then I do not need one The laws of most countries make this sort of trading a professional, and hence taxable, occupation. If the same holds true for MM2H participants, and it probably does, this would give the Labuan route the edge.

Incidentally, I have been to both Gibraltar and Malta, and I am familiar with the advantages and tax incentives they offer. Actually, these two places are my favorites in Europe. However, both of them suffer from the same drawback: You can only swim in the Mediterranean Sea four to five months a year. As far as Malaysia is concerned, my greatest worry is humidity. Although this was no problem during my holidays in Singapore, Bangkok, or Koh Samui.

By the way, still no reply from Yvonne. Not in my spam folder, either. I will probably have to contact another MM2H agent. Anyone know an alternative?

Davita

I'm surprised Panama didn't feature on the OP's spreadsheet...to most N. Americans it is an ideal warm and tax free location for retirees and those who invest.

InVinoVeritas

Panama is no longer tax-free for US citizens which is why they have all left!

Davita

Americans are not 'tax-free' anywhere in the world, including USA MM2H holders living in Malaysia. U.S. Citizens and Resident Aliens Abroad - Filing Requirements

I was posting generally that Panama does not tax on overseas earnings.... similar to MM2H.
If Americans have left then more reason to see if Panama is viable....must be lots of good property sitting idle...

InVinoVeritas

Sorry but you specifically mentioned N. Americans

It has always been true that US citizens are liable to US taxes on their income, even if living overseas, but when there was no tax treaty most of those living in Panama didn't declare.

That all changed in April 2011 when the US and Panama signed a tax information agreement and the veil of secrecy was lifted.

There are indeed a great many empty properties in Panama and a great deal of land for sale too but while they may be cheap I don't see them being a very good investment until demand catches up with supply.

Davita

N. America includes Canada, which is where I'm from, and why I visited Panama. Canada uses residency rules for taxation, unlike USA.
If USA citizens, in Panama, didn't file for taxation in the USA then, according to the link I previously posted, they were not complying with IRS rules.
Panama still doesn't tax USA citizens but the agreement probably means USA citizens can no longer avoid responsibility to the taxman.
I believe the OP is Swiss and she rationalized Malaysia gave tax benefits to her requirement...I just pointed out that Panama was similar.
If there is little demand for property then I would think it a good time to invest...particularly for retirees who wish to settle.

NeonHippy

Quite right a spreadsheet is only a tool to shortlist options for further investigation. You have at least weighted your criteria as well as scoring them. Such multi-attribute decision analysis is useful but more effective when a group with different views are involved. For a single person it is too easy to bend the result according to your tastes. But then you are the one who will end up having to live by the choice. So no surprises that your preference may not be the same as someone else but for reference my two top scorers were Malta and Malaysia. The great thing about MM2H is that you can give it a try and if it turns out not to be to your liking then you can get most of your investment back. You only loose the cost of application (plus agents fees if used) and the annual visa charge for the years that you stay. Assuming you do not buy a property or car until you are sure.

The MM2H portal is down at the moment so I cannot post a link but go to www.mm2h.gov.my and you will be able to find a list of agents. But don'the give up on Yvonne, the MM2H office has been closed over the new year. Your question is unusual enough that she probably will want to contact them for an answer.

teejaydee

I admit I was being a bit cheeky with my spreadsheet comments. The reason is I was reminded of the similar spreadsheet I constructed some years ago, when I was beginning my own search for somewhere to live. I tried to apply scores and weightings to various criteria for the various destinations, but I realised I was focusing too much on quantitative factors rather than qualitative ones. I therefore abandoned the spreadsheet and haven't used it since.

My own occupation is similar to yours except I class myself as an investor rather than a trader. I am happy to admit that I lack the skills and courage to day trade. I admire you for having these attributes, and for being able to employ them so successfully.

When you do speak with Yvonne, may I suggest you ask her about the best way to cover the MM2H requirement of having RM10000 per month income. I suspect your income (ie. trading profit) varies from month-to month. My own view is that you should set up a separate bank account, into which you deposit each month a sum equivalent to RM10000. You can then show these bank account statements as proof of income. It keeps thing simple.

Having said that, although I do not have complete knowledge about the Labuan route, I tend to agree with you that it is the better choice. One attraction of this is that you can use the Labuan company even if you choose to leave Malaysia at some time in the future. This may well give you on-going tax advantages in other countries.

jackblack

I've just followed the Labuan route, it cost me USD4,300 to set the company up including work permit and 6 months tax. I pay myself a salary of RM5,000 a month after 6 months of tax my salary will be tax free, as the CEO of my company I get 50% of my salary tax free and the remainder is below the tax threshold. The company is an Investment Holding Company, which I plan to use to invest in shares, bonds and PE locally and overseas. Any profit the company makes is tax free and there is no requirement to file accounts. I started the process in September last year and by December, I had everything set up, work permit, bank accounts etc. I could have done it faster but I travel a lot! From what you have said, the Labuan company route is ideal for you, you can do day trading using the company and pay no tax on the profits. I looked into MM2H but it's too expensive and too much hassle!

Twixy

Thanks for the information Jack. Did Gary specifically tell you if going the labuan route will allow you to live in Penang or Kuala Lumpur?

mikemike

Jack black thank you for an excellent update.

Can you specify how much you pay labuantax.com be it monthly or annualy as a retainer to keep the 'shell company' on the books etc

teejaydee

This is very useful information. Thank you for sharing it with us. I would also like to know the answer to mikemike's question about the on-going cost of using the company.

I would also like to ask three further questions please:

1. Is the work permit of indefinite duration, or does it last only for a fixed time?
2. Did you have any problems finding a broker to set-up a trading account in the company's name?
3. Could you just clarify the salary and the tax implications? You say: "I pay myself a salary of RM5,000 a month after 6 months of tax my salary will be tax free, as the CEO of my company I get 50% of my salary tax free and the remainder is below the tax threshold." Do you mean you only have to pay tax for the first six months in the first year? Is your salary tax-free in subsequent years?

bakedbean

Great first post. Very helpful for others. Welcome to the forum

jackblack

I didn't use labuantax.com, the first time I heard of them was from this post. I've been based in KL for 16 years and used a trust company I know here. Labuan tax prices seems similar, however, I think I got it slightly cheaper in KL. I worked out the ongoing cost to be about USD4k per year over a 5 year period.

jackblack

1. The employment pass is issued for a period of 2 years and requires a visit to Labuan to have the pass put in your passport, literally it's an half an hour job! It needs to be done in person every 2 years.

It's important to note that the company must be seen to be doing something, not just a "shell company", otherwise it's unlikely they will renew your work permit. I plan to transfer RM150k from my other offshore company every year, this will make that company 100% shareholder. 50% of that will be use to pay my salary and run the company and the other 50% I will invest. I'm told that this will be more than enough for the company to be seen as a legitimate entity, even though its an investment holding company and non-trading.

2. I used a local bank to open my company accounts and online share trading, the trust company will help you with the paperwork for a fee. I did it myself as I already have a personal account with the bank, so it was no problem.

3. A person with an employment pass in Malaysia is liable to pay monthly tax on its employment income. For a minimum salary of RM5000.00, the monthly tax rate is RM650.00. A tax rebate to reduce this amount is only available after establishing tax resident status in Malaysia, normally being in Malaysia for 182 days or more in a calendar year. The rate after establishing tax resident is NIL. There is a special incentive for the CEO of a Labuan company, which allows 50% of the salary to be paid tax free. So once tax residency has been establish no further tax is payable.

Feel free to PM me if you want anymore details.