so is there anyone out there who has been able to take their UK sipp tax free whilst mm2h resident ?

First, I think you're supposed to declare the overseas income/pension anyway and then claim the exception as the income has been taxed overseas.

As I mentioned, the text also says that income that is not taxable in the source country due to the country's tax system is also covered by the exemption. So it might be that a pension that is not taxed in the other country because the tax rules says that it's not taxed when you don't live there, can also use the exemption in Malaysia.

However, I believe one clear situation when you can not use the exemption is if you use a tax treaty between Malaysia and say UK to avoid paying tax in the UK. Then you can clearly not use the exemption in Malaysia.

All this is still unclear and new, so I wouldn't do anything. But if you want to be 100% sure of no surprises then I think you need to file in Malaysia and try to claim the exemption and see what happens.

Where is this from? Official sources or something an agent wrote?

from an agent but, looks like a copy and paste from officialdom smm2h.com/incentive-sarawak.html

That link is also an agent, and for sarawak mm2h. Might still be correct, but I'd check closer.

That entire website had its last update on 31 October 2019. Be very careful with what you read there as the rules have changed multiple times since then.

I would be interested to learn on what the basis the conclusion below is arrived at. Would there be any official guidance from the Malaysian tax office that sets out that UK SIPP pension (not taxable in the UK due to the UK-Malaysia double tax agreement) remitted to Malaysia is not eligible to the exemption? Thanks.

However, I believe one clear situation when you can not use the exemption is if you use a tax treaty between Malaysia and say UK to avoid paying tax in the UK. Then you can clearly not use the exemption in Malaysia.

It's because the exemption requires the income to have been taxed in the source country. If it's not taxed in the source country then the exemption doesn't apply.

im going with

• The UK-Malaysia DTA (signed 1996, amended 2009) governs pension taxation under Article 18:
  • Private pensions (like a SIPP) are taxable only in the country of residence unless paid by a government scheme.
  • If the UK citizen is a Malaysian tax resident (182+ days in Kuching), the UK cedes taxing rights to Malaysia, meaning no UK tax is withheld on SIPP withdrawals, and Malaysia’s rules apply (exempt as foreign-sourced income).

Foreign source income is no longer exempt. There is an an exemption, as discussed above.

so what i posted would be correct until 2036, which is when the exemption will end if its not renewed again

except that the exemption only applies to funds already taxed soMalaysian Tax Treatment of Untaxed UK SIPP Income

Since the SIPP distribution wasn’t taxed in the UK:

• It does not qualify for the FSI exemption.
• Upon remittance into Malaysia (cash or electronic fund transfer), the amount becomes foreign-sourced income received in Malaysia and is subject to Malaysian tax.

so its complicated and best to speak to a qualified tax accountant before making any decisions

but what happens if the money is not remitted to malaysia, e.g not taxed in uk if your malaysia resident, but sipp is never paid into malaysian account?

Then it's not taxed. Same as before

Thanks for the reply, Stephen.

Just a couple of questions playing on my mind:

1. How is "remitted to Malaysia" defined? Is there any clear guidance on it as I have seen conflicting posts re: payments made in Malaysia but settled by foreign payment cards. In the UK, HMRC has clear guidance for its scope.

2. For SIPP income taken prior to becoming Malaysian tax resident, would it be taxable in Malaysia when it is remitted after becoming Malaysian tax resident? For example, someone becomes Malaysian tax resident in 2026. He withdrew his tax-free element of his SIPP in 2024 and then remitted it to Malaysia in 2026. Would it be liable to Malaysian income tax?

3. Do we have the option of leaving the SIPP pension to be taxed in the UK before remitting to Malaysia. The idea is to use up the personal allowance. However, per the UK-Malaysia DTA, I suppose there is not an option as the taxing right lies with Malaysia.

4. Would anyone be able to recommend a tax advisor in Malaysia to advise such tax issues?

Thanks in advance

First, I'd say that this is all theoretical conversation. I don't think there would be much issue in Malaysia at least not yet, as most people seems not aware of the details in these rules, and even people in the tax office seems to not know very well. Focus on foreigners is probably less than on locals. Also, the new MM2H rules reference that remitted funds are not taxed, however this might be their understanding of the rules, and not actual laws as there is no specific tax laws for MM2H. Without giving any advice I'd say that I would just simply use and quote the "exempt until 2036". However if you are considering moving to Malaysia and the long term tax consequences then it might be good to get professional advice.

1. There is a list, I don't have it here, but using foreign cards in Malaysia is counted as a remittance
2. Income earned prior to becoming Malaysian tax resident should not be taxed
3. You should check on the UK side, but I'm pretty sure that can be done by just not claiming to use the tax treaty/ not getting a Malaysia tax residence certificate. I'm not sure if you then could use the exemption in Malaysia, it might not be possible if the income should be taxable only in Malaysia.
4. I've seen what some of them have written which is clearly not correct according to the rules. The big companies PWC etc are probably the best to get trustworthy advice.