InVinoVeritas

There may well be better ways to manage immigration but, as Davita says, it is Malaysia's choice how they do it. It is rather better than the US system

InVinoVeritas

Actually there is one major privilege which no-one has suggested will be withdrawn - no tax liability and, just as importantly, no need to do tax returns either

Epicurious

Absolutely it's Malaysia's choice, no argument about that. But we are (for now, at least) allowed to have opinions and to argue amongst ourselves about what might be a more rational and profitable approach to immigration control.

I'd happily register for a tax number here if I could. I have zero local earnings, so no tax to pay. But I'd be happy to pay tax on the interest from a savings account with a local bank, if I was allowed to open one. Another revenue stream that Malaysia doesn't want, apparently.

RedApe

"You are seeing it from your perspective. From a Malaysian perspective they do not need to offer any long-term visas to foreigners and, as IVV says in post #56 , they may wish to be careful on who they allow into THEIR country."

From a Malaysian perspective (although I doubt that the thinking is so monolithic as there being ONE perspective) they don't have to allow ANY travellers into the country.

Clearly they do so for any number of reasons. One is financial - tourists bring it foreign currency, support various sectors of the economy (and for MM2H that would include real estate, both rental and purchase), provide a pool via the fixed deposit for investment. It buffers the economy from downturns in oil prices or threats to palm oil.

I always get the impression that MM2H was once thought to be vastly more successful than it actually is. Tens of thousands of Chinese were going to participate, thousands of Indians, Japanese retirees, Europeans, etc. It was, after all going to fill up Forest City, and some equivalent spot in Kedah. It WAS going to be a major leg in the Tourism Economy, along with Agrotourism and Health Tourism. It's a matter of cost benefit. Is the bureaucratic cost of having the program less than the funds it brings in. Is a MM2H visa more hassle than a Single Visit Visa with Reference? Or ten of them? I can't see how it could be?

And having a relatively soft MM2H actually would reduce visa running by people who are staying a year or so. It's unlikely that one is going to "catch out" someone until the third or fourth "run". If you do it one someone who is coming back in for a second time you are more likely than not going to block people with RT tickets out of KL. That would be disasterous for the tourism industry. But if it's easy to get a short-term social visa then maybe there would be less hopping.

Oh, and now with the days of ATM's all one has to do is have the person use their card to get a deposit receipt from the machine next to the counter and show how much is in their accounts. Easy-Peasy.

Plus you get to scrutinize some aspects of their finances. and backgrounds.

Clearly the proponents may have overreached...but they seem to be increasing the requirements rather than doing the logical thing...which is to offer MORE incentives, reduce the cost (not increase it to a RM500K fixed deposit, increase the asset requirements and eliminate the "pension option"). That seems more of a way to kill the program, especially now that currency controls in China make it more difficult to bring cash out.

Another reason for having a fairly reasonable tourism pass/visa programis political. No country (expept maybe the hyper nationalists) wants to be seen as pulling up the draw bridge for visitors and business. Having a fairly open tourism/visa policy often offers leverage for reciprocation. That allows Malaysian students to go abroad for educations, Malaysian businessmen to travel abroad and make deals, purchase property, and spend some time outside the country. For some groups they might want to actually live abroad (Plan B, I think someone called it).

Gunnar45

Yes, the tax issue is quite important.
Interest/dividends earned from bank accounts and most investment funds are tax free in Malaysia. Interests on FD's are around 4%.

Appr. MYR / USD rates in the last three years, Jan-Dec:
2015: 3.63-4.30
2016:4.29-4.48
2017: 4.48-4.06
And today its ~3.95
So not much difference over the years and the interest would anyway be spent in Malaysia.

Regarding no tax on overseas earnings...
With the governments today desperately seeking new revenue (taxation) sources, also the legal emigration from ones home country is becoming increasingly difficult with authorities requiring proof of residence registration like tax register number etc.
If one doesn't have a registered residence in any country it may therefore be difficult to claim tax relief in the home country.

And many countries tax their residents (and/or citizens) for all their income regardless where earned.

RedApe

I'm from one of those "Citizenship-Based" Taxation nations...the USA. So I "technically" get taxed on both my US (domestic) income, and my foreign income streams. But, as in all things the reality is generally different. There are substantial deductions/exemptions for foreign based income that is subject to taxation by the host (residence) country, so that really only millionaires with substantial foreign earnings are impacted.

A lot of Americans grumble about this (not surprising, the grumble about taxes of any sort, whether they pay them or not) but it's mainly the paperwork and the need to fill out additional forms. But you have to fill out an additional form if you have a second US bank account, a retirement account, etc. Grumble, grumble, grumble.

It's interesting that the US and Eritrea are the only countries that have 100% Citizenship-based taxation whereven you may go in perpetuity (and Turkey essentially has the same system as the US)...but Finland does so for a period of three years. Hungary does so unless there is a tax agreement between that country and Hungary. Myanmar does it for investment income, but not salary earned abroad. Then there are the European countries that tax their citizens who move to whatever they define as "tax havens" (such as Italy). Some of these countries only demand payment for a set number of years (Mexico ~ 3 years; Sweden, Portugal and Spain ~ 5 years; France taxes it's citizens who move to Monaco. The Philippines, Vietnam and Myanmar used to have the citizenship based systems but have all shifted to residency-based taxation.

Gunnar45

RedApe,
Yes, some countries demand tax payment only for a set number of years but becoming exempt is residency based so one has to prove legal residency. This may be difficult for visa runners and is in my opinion quite an important reason for obtaining MM2H.
Even if you don't choose to live here......

RedApe

I'm puzzled. Could someone living in the UK claim "legal residency" in Malaysia because they have a MM2H visa??? How does that work?

I could see if you were legally outside your citizenship domicile for say, 9 or 11 months and had the MM2H visa...but I'd think they'd be all over someone (a UK citizen) living in Sussex while claiming legal residence abroad when not physically abroad.

I can certainly see that a country could say that one has never "really" become a resident of a country if they just have a slew of tourist passes. The originating country could say "you still have a tangible connection" while the "host" countries could say...you are not a legal "resident".

And as a corollary question...If one enters Malaysia and doesn't get the exit stamp how does that effect the 181-day Malaysian tax status (one gets reduced tax rates on Malaysian earned income the longer one is in the country above 181-days). Does the MM2H social visit pass DEFINE one as a tax resident or do you have to be physically present? Tax residents appear to benefit substantially from having lower income schedules.

http://www.expatgo.com/my/2016/03/29...pats-malaysia/

hnd

Since 2013 there has been the Statutory Residence Test which governs pretty much who is and who is not regarded as being resident for tax purposes. We have been “non resident for tax purposes” for some years now and, in fact, have spent fewer than 40 days ‘in country’ since 2005. We also own no property there and have no mainland UK bank or building society accounts.

Some information on the SRT can be found here:
https://www.expertsforexpats.com/exp...esidence-test/

InVinoVeritas

RedApe, there are some other very good BE threads on the whole issue of tax residency in Malaysia and disentangling oneself from HMRC.

As regards MM2H, I think this (or a long term social pass) would indispensable as a first step to proving Malaysian tax residency - since there is no need to declare, or pay, taxes on non-Malaysian income you would not be able to show much other paperwork.

A TIN (Tax Identification Number) is also becoming a requirement for most banks, brokers etc and for this you would need MM2H plus a passport showing 180 days spent in Malaysia (or you can get a TIN if you buy a property).

Normally this is enough for HMRC.

On the subject of visa-running this article from a couple of days ago shows just how much Malaysia is tightening the screws:-

https://sg.style.yahoo.com/famous-pe...062324243.html

RedApe

Agree the thread has strayed very far afield.

And I posted the article about the crackdown on visa running (the famous street artist that wasn't allowed in) upthread. I recall that Indonesia did that a few years ago as well (and was a well known method for extracting bribes...Rp.1 million could get them to look the other way I heard). Then they imposed the Visa Fee...which plunged tourism visits in some parts of the country back to the stone age.

SushiFan

Another good source of information about taxes in Malaysia is this one:
https://ringgitplus.com/en/blog/Pers...uide-2017.html
Not only the article itself, but also the many questions&answers below it. They write a new article every year.

Epicurious

That guy is verrrrry far from being the typical aged visa runner that we're talking about here. Young, high-profile artist, history of political commentary. He put someone's nose out of joint, I'll wager (to any spooks reading, that's not an invitation to gamble; I never gamble and would never recommend it.)

merlinman

My point in post #41 was the very arbitrary application of the rules by whichever Immigration officer happens to be duty, the length of his shift (in our case it was after 10 p.m. on a Sunday night), perhaps even which side of bed he got out of that morning. There was certainly no "reasonable doubt" (Gunnar45 post#31) in our case. There is obviously no liaison or information-sharing between Immigration & MOTAC who administer the MM2H programme. If there was the former could not possibly think that a 14-day special pass would be adequate to obtain MM2H (Gunnar45 post#42) & would allow sufficient time, having regard to MOTAC's snail-like processes, to obtain approval.

With regard to length of stay, whilst those who do so only for a month or two at a time, or even openly admit they might not even come to the country at all, may convince themselves they satisfy all the legal requirements they conveniently ignore the spirit of the programme. After all, MM2H means Malaysia My Second Home -home implies residence, not somewhere one might deign to visit (or not) sometime in the dim distant future. If, as would be the norm with any sophisticated government, the Malaysian authorities employ PR people to monitor these public forums, the "thumbing nose" views often expressed here would be cause for concern & appropriate (adverse) consequences & rule changes may well be anticipated.

Davita

I see you want to emphasize that the spirit of MM2H means having a 'home' but omit to mention it says a 'second home'. This means the applicant should have a primary home elsewhere but I never heard of anyone being asked that question.
If a primary home elsewhere was a requirement then, obviously, spending time out of Malaysia would be necessary.