StillSearching

RedApe: Maybe the desire to not have short term MM2H residents had something to do with this issue.
Apparently some MM2H applicants were using an agent to set up some sort of rental with their property when the visa recipient was not present. It led to aproperties becoming derelict when the agent didn't properly maintain the units...and not paying the owners.
https://www.malaymail.com/news/malay...tration/570551
------------- Investors bought shares and have apparently been defrauded. Lovely. Who want to continue payments if the land titles to the villas have not been transferred to the investors.

RedApe: Odd that they'd allow three months for any other tourist, but an MM2H visa-holder they restrict to a month.
------------- I've read that the reason that Sabah allows only one month stay is that they protect their jobs. However, their immigration officers can issue you a longer stay, maybe even one year, if you convince them that your reason to live there is for pleasure, not work. You can do this right at the border. Talk to an offices in a booth and then they will send you to talk to their manager. Show papers proving that you can support yourself; you visa in Sarawak will help too, your health insurance, a rental you intend to rent. It helps not to look like a hippie. This is my guess. Why not to try- it is relatively easy, right?

BTW since you like snorkeling, be careful about snorkeling in north-east of Borneo- there are cases of pirates killing tourists. Also, it looks like there is a big problem with stinging jellyfish everywhere in Malaysia and Thailand. Jellyfish grow out of control because their natural predictors are fished out, because of pollution and raising temperature of the water. Be aware of a deadly (for some people) box-fish. It is found even 3 hours out on a boat in the sea around Borneo.

RedApe: As to using Sabah for the MM2H...it's too restrictive on extended outside travel.
------------- Their rules currently are very vague on what it means staying in Sabah "considerable" amount of time. It is not written anywhere; it only comes from their judgement. I've read on a forum that they denied a visa extension because a person didn't live in Sabah practically ever. I don't understand why they can't make a written rule on how long an MM2H holder suppose to stay their.

RedApe: and I don't think they are realistic on having to show that you have actually shipped household goods.
------------- Probably even this depends on each applicant. It is up to you to prove that your intention to stay in Sabah is strong. Again, there are not written rules at this time. They scan you and your documents and just go by their belief if you are honest or not. Again, they are looking for the applicants who truly want to live in Sabah and contribute to their economy. We've been interviewed and they even asked us why don't we just buy a property there! They are afraid that we start renting just in order to get an approval.

RedApe: I'm not sure if the way they are setting it up will actually appeal to High Income Investors - which appears to whom they are targeting.
------------- This is why they wanted us to buy a property in order to be definitely qualified. But buying a property is a crazy option at the pick of the market. It is also risky for them even to ask for this, because there are countries where you can get a citizenship for buying a property. But Malaysia is offering only 10-year visa. Investors always consider what they get in return. Some High Income Investors like to move around and they don't want to be tied up to one place because they may be stripped of their permanent residence. This was one of the reasons why we didn't like a permanent residence in Malta. There are vaguely determined restrictions for a permanent resident holder on how long you can be out of country.

RedApe

Regarding the shipping of household goods as proof of intent to reside in Sabah.

1) My understanding is that Malaysian Customs REQUIRES that one includes a copy of your VISA when your shipment arrives in Klang so that you can actually have it receive "tax-free" status. SO you need your MM2H Visa BEFORE you ship your goods. Then they transship it to KK (his is the onerous system of Cabotage that faces both Sarawak and Sabah).
2) Who would send their household good to a country where they have not already received assurances that they would be allowed to reside within a country?

While I can see this as being useful in RENEWING the Sabah MM2H visa it disqualifies almost everyone else. No original applicant would be able to ship their goods without proof of a Long-Term Stay Visa.

I don't think that whoever is making up these regulations has a lick of sense about the effects on the applicants...or a marketing or business sense. They go "how do we exclude the rabble (all but those who are wealthy and willing to buy property and spend all their time in Sabah- ergo even most middle class and upper middle class retirees)" and then don't realize that the reason the Wealthy ARE Wealthy is because they made shrewd, comparative business choices. You are absolutely correct...a wealthy person will demand citizenship, the opportunity to do business within the country, tax advantages, mobility (no restriction on movement), the right to buy lots of property (both high and low end). There are many countries that offer such things...not a bevy of restrictions. All they actually are doing is driving away most people who did apply.

If they create regulations and then later "bend them" it also scares away those that actually "read the brochure". That's the first filter, though an agent may say "don't worry about THAT, they will ignore THAT if you also show THIS". When an agent says such stuff it sounds like the rules don't mean anything...and that works both ways. I can also mean that a regulation that benefits the applicant/recipient may suddenly also be ignored. It implies a lawless society, where rules can be ignored for a little baksheesh. Or knowing the right people. Special rules for some and not others.

StillSearching

RedApe, sorry for not answering earlier. We’ve been busy with relocating to KK, because we’ve got an approval, which came in just 1.5 months. We are very happy about this. Here are my answers to you-

RedApe: My understanding is that Malaysian Customs REQUIRES that one includes a copy of your VISA when your shipment arrives in Klang so that you can actually have it receive "tax-free" status.
------ When we've been shipping from EU to KL, they’ve been fine with just an email from MM2H office that we started the process. We paid no taxes on our shipped household goods.

RedApe: SO you need your MM2H Visa BEFORE you ship your goods. Then they transship it to KK (his is the onerous system of Cabotage that faces both Sarawak and Sabah).
------ I don’t know about this route, because we’ve been shipping from the peninsula to KK. Can’t you ship directly to KK from abroad? It is the best to consult shipping companies.

RedApe: Who would send their household good to a country where they have not already received assurances that they would be allowed to reside within a country?
------ We actually confirmed our rentals and shipment only AFTER the interview at the immigration in KK. I agree with you that it is risky. You really need to get a feeling from the immigration that you are welcomed there.


RedApe: I don't think that whoever is making up these regulations has a lick of sense about the effects on the applicants...or a marketing or business sense. They go "how do we exclude the rabble (all but those who are wealthy and willing to buy property and spend all their time in Sabah- ergo even most middle class and upper middle class retirees)" and then don't realize that the reason the Wealthy ARE Wealthy is because they made shrewd, comparative business choices.
------ Well, I understand that Sabah wants to get the benefit from the expats spending money in their economy. Though, it is interesting that they still didn’t put any restrictions in print for minimum stay in Sabah for MM2H holders. Many countries do have this restriction and this is one of the reasons why we like MY- we can actually live for some time in other countries.

RedApe: ...a wealthy person will demand citizenship, the opportunity to do business within the country, tax advantages, mobility (no restriction on movement), the right to buy lots of property (both high and low end). There are many countries that offer such things...not a bevy of restrictions. All they actually are doing is driving away most people who did apply.
------ I am not sure about “many countries”, however MY offers a very good deal. Therefore, this is why we picked MY as our home-base. He or she can get as many citizenship and permanent residences as they want and can.

Why Malaysia is so attractive for English-speaking expats?-
1) By our research, there are only a dozen countries, which have no taxation on a foreign income. MY is one of them as you know.
2) Filter out non English speaking countries. It is very comforting not to struggle with the official documents made in a foreign language.
3) Then consider cost of living.
4) Then consider natural disasters. MY is perfect in this respect.
5) Then consider crime level. (BTW, there are only 0.7 guns per person in MY and 120 guns/person in USA, as an example.)
6) Development level (health care quality and etc).
7) Pollution level.
8) Restrictions on PR, cost of maintenance, and also hidden costs. In case of citizenship, consider the cost of obtaining a citizenship.
I made a spreadsheet marking all possible parameters for comparison and MY came out as a winner!

RedApe: If they create regulations and then later "bend them" it also scares away those that actually "read the brochure". That's the first filter, though an agent may say "don't worry about THAT, they will ignore THAT if you also show THIS". When an agent says such stuff it sounds like the rules don't mean anything...and that works both ways. I can also mean that a regulation that benefits the applicant/recipient may suddenly also be ignored. It implies a lawless society, where rules can be ignored for a little baksheesh. Or knowing the right people. Special rules for some and not others.
----- Agree. This was one of the reasons why we left Malta, deciding not to proceed with their PR program. They simply don’t follow written by their own Agency rules. The worst may happen in Sabah is that they will not renew our visa after 10 years. Then, we will have another plan. I am sure that there will be great options in 10 years. Be optimistic about your future.

RedApe

I've been to Sabah...ohhh..about 20 times in the last 20 years, so know all about the issues with "pirates" attacking tourists (more likely to be struck by lightning on a soccer pitch in my opinion). Agree with most of your points (2-7) but most countries do not tax foreign income as long as you earn and keep it outside the country or don't earn interest on it locally. There are tax treaties so that one doesn't pay double. The US and UK have tax treaties with scores of countries. And the US has fairly generous refits and exemptions if one does opt to pay taxes of foreign earnings. It really depends on your nationality and the country you are moving to permanently (or for a enough time to be a tax resident).

I've found crime vastly less worrisome here - but something is askew with your firearm ownership numbers. 0.7 guns per person in Malaysia would mean that of 10 people 7 Malaysians would own guns. And I seriously doubt that the average American owns 120 guns.

Lastly there is virtually no way to get a PR, and certainly not citizenship, in Malaysia. It would certainly be nice (particularly for property purchasers) if they counted your years of residency on MM2H as a a factor in awarding PR status. But MM2H tenure is specifically not counted towards the "lived her 10 years" criteria. A Social Visit Visa, or Work Visa, does count in this regard, but not MM2H. But there are other criteria as well to get the "points" to be awarded a PR. Married to a local, having kids, having contributed significantly to the Malaysian economy or culture, speaking BM fluently, etc. all accrue points.

StillSearching

RedApe: you need your MM2H Visa BEFORE you ship your goods.
----- I already wrote earlier that just an email confirmation from your agent and mm2h office that you submitted your documents and went through the interview is enough. It worked for us in KL and probably the same in KK.

------ Regarding statistics on guns, type in your browser "amount of guns per person in countries" and go to wikipedia, which is very reliable source. 120 guns/person means that some people have huge amount of guns, because many people don't have any guns. I am not sure if this number includes police.

RedApe: It implies a lawless society, where rules can be ignored for a little baksheesh. Or knowing the right people. Special rules for some and not others.
---- It maybe true in some countries. However, it is a different case in Sabah. As we’ve been told, they are currently modifying their rules and it looks like they are simply testing their applicants by asking questions. This is my impression. They said that they will not going to check if we are staying in Sabah for 10 years or not. So, we will see. But we like Sabah so far and planing to have it as our homebase.

RedApe

Re. Showing your goods have been sent to OBTAIN your Sabah MM2H Visa. That fact that you need the visa FIRST to obtain the Shipping Permits is precisely the problem. It's a classic Catch-22. You can't ship without proof (provided to the shipping company) that you hold a visa allowing you to ship Household items. And if Sabah is requiring that you show proof that one has shipped goods then it will likely prevent most from applying. As you note, you shipped your goods over from the Peninsula...so didn't have to go through customs on the Peninsula.

Re. Number of guns : Wiki and other statistical references (http://www.smallarmssurvey.org/filea...ms-Numbers.pdf) show that it's estimated that there are @120.5 Civilian-held firearms/100 people in the USA...NOT 120 guns/person. While that's 1.2/person the distribution is likely heavily skewed with certain people holding arsenals, while others have no interest in having a weapon at all. There are also people that have "craft guns" (antiques, little used heirlooms, etc.). Canadians have about 1/3 as many weapons as those other North Americans just to their Southern border but vastly lower gun crimes...most weapons are specifically used for hunting/safety against wildlife. The US population (at least certain sectors) is vastly over-armed, and are more like nations that are in, or have just had, Civil Wars. I'm not excusing that.

Malaysia, by comparison, is virtually "gun-less" as it relates to non-military/police held weapons (0.7 per 100 civilians). The few guns out there are likely to be shotguns used for hunting wild boars and deer, a few illicit weapons carried by criminal Towkays, and some vintage weapons from the Konfrontasi period. Oh...and some weapons smuggled in from the Philippines (which has about 3.6 firearms per 100 civilians). Yeah, it is a lot safer here. Still no reason to be complacent.


And as I have said, whether people apply for the program in Sabah (or anywhere) is all about perception. You've successfully navigated the program. But others may find the "making up the rules as they go along" approach off-putting. Many people like written rules, especially for a decision that is important as finding a retirement locale, buying a property, moving their worldly possessions someplace. As you have indicated, Sabah may not be ideal for someone planning on living somewhere else for an extended period. If they need to work half the year outside Sabah, or want to (or must) travel a lot, then perhaps its not so ideal.

StillSearching

RedApe: you shipped your goods over from the Peninsula.
----- When we've been shipping our good from EU to KL, our shipping company in KL was fine with just an email confirmation from MM@H office that our application was accepted. I am assuming the same applies if you ship to Sabah. However, it is not a requirement to show that you are moving your goods. This only will make your case stronger. Their MM2H office only requires you to rent or buy a property.

RedApe: Number of guns: 120.5 Civilian-held firearms/100 people in the USA..
----- Correct. Sorry, I overlooked. It is much better. But still too much.

RedApe: Sabah may not be ideal for someone planning on living somewhere else for an extended period.
------ Why would you have MM2H if you are not planning to live here? Just in case you may move here? Basically, if you are not planning to renew it in 10 years, you can still go through the trouble of getting it in Sabah and not live here all the time. Again, they don't say how much time is considered "significant" for staying in Sabah in order to renew your visa in 10 years.

RedApe: If they need to work half the year outside Sabah, or want to (or must) travel a lot, then perhaps its not so ideal.
------- It is only your assumption. They might be fine that you work abroad for 6 months and stay in Sabah for 6 months. Or travel for up to 6 months and then spend the rest of the time here. People have good reason to spend time abroad, e.g. grandparents are spending the whole summer with their children and grandchildren abroad. I really doubt that you will be refused to extend your MM2H in 10 years if you absent for 6 months visiting your family abroad.
As far as I know, they didn't extend this visa to someone who never even lived in Sabah. It would be nice if they didn't apply this rule retroactively to current MM2H holders who didn't even think that this can be an issue.

Gunnar45

Income form overseas is not taxed in Malaysia.
I think Malaysia is a perfect base for living when working abroad (in other countries than Malaysia)

But - regarding liability for tax in ones home country, it depends of course on the applicable laws and ones residence status in the original home country.

StillSearching

Yes, Malaysia is perfect, because it doesn't tax on ANY foreign income.
However, one may still pay taxes to the countries where they receive earnings (stocks, properties, job and etc). The US citizens pay taxes no matter where they live abroad and no matter where they receive income.

RedApe

I agree...some people use the MM2H to provide the proof of residence outside the country (and this depends on the country of origin) required by their home countries for tax purposes.

Unlike a tourist who can travel outside their homeland for a year and still be taxed (because they have not technically established foreign residency), an MM2H gives one the evidence one needs to show an established residence outside the country for >182 days (for the US this is 330 days). One becomes a tax resident of that other country at that point, and subject to THEIR tax laws, not that of the homeland. If you are over 182 days in some countries (not just the US) one can be taxed on Worldwide Income. Things can get even more complicated if the home country has a tax treaty with Malaysia. This is a nation-to-nation agreement on who gets taxed, how much, and when that kicks in. The US does have tax treaties with a lot of countries and in these cases may not tax on worldwide income, but most US expats are going to be able to deduct taxes made by a foreign country (up to $104,000 of income).

Gunnar45

Aren't US citizens or taxable subjects (like green card holders) allowed a substantial deductible when they are living abroad?
I had some US colleagues and even though they were obliged to fill in their US tax returns, they were not paying any US tax.
Another guy who lived as retired in Austria with pension paid out for long term work in Europe did not file returns and was discovered by the iRS and even though his income wa below the deductible, he still had to pay a fine for not filing an income declaration.

InVinoVeritas

This information isn't correct, RedApe, though some people may have used this method in the past.

An MM2H visa is NOT evidence of residence in Malaysia since there is no obligation to have available accommodation or even to spend any time in Malaysia. In any case, under AEOI (which is now in operation) banks and other financial institutions will ask you for a TIN (Tax Identification Number) as a first step in establishing with whom they will exchange tax information. Failure to provide a valid TIN will result in them exchanging information on the basis of any prior information they hold or with their local tax authorities.

There are only 2 ways to get a Malaysian TIN; (i) to buy a property in Malaysia or (ii) to make a tax declaration in Malaysia, at which point the Malaysian tax office WILL check passport stamps and flight tickets to establish a minimum 183 days have been spent in Malaysia prior to issuing the TIN.

Even a TIN is not proof absolute of tax residence but currently no-one is asking for any additional evidence.

RedApe

Yes US taxpayers living abroad can establish foreign residency in one of two ways. One is Physical Presence (first year 330 days). The other is the Permanent Domicile (which may include a combination of factors, including visa, property purchase, employer-provided property, foreign tax number, etc.) Though they don't require physical documentation WITH the tax form, they can require that if you are audited. Mind you that they are also receiving information from your bank now, so that anything that looks TOO sketchy will be obvious.

There are three options to deduct their foreign Earned Income. They can either use a deduction of their first $104K of foreign-earned income. The other option is the Foreign Tax Credit (which is a direct deduction from your US taxes of that paid in tax to a foreign country). You cannot do both. Or they can deduct/exclude their housing costs (up to 30% off their salary) provided they don't exceed their $104K maximum, and the costs are "reasonable" for the region. The allowances for the Housing deduction are quite generous and not only include rent, but utilities (but not phone, TV services, and internet), personal property insurance (such as homeowner’s or renter’s insurance), leasing fees, furniture rental, parking rental, and repairs. You cannot use mortgage payments, domestic labor (maids, housekeepers, etc.), purchased furniture, and anything deemed “lavish or extravagant.” For Malaysia the maximum housing exclusion is US$46,200 for KL and US$33,700 for other cities. Above that it's considered too opulent ;-)

Theoretically if someone is making US$90,000 in foreign income and lives in a $25,000 rental...they could exclude the maximum. They'd have no US tax obligation (though they'd have a Malaysian tax burden, likely much lower). Of course, they'd still be taxed on US income, though they could claim the personal deduction there. There are also deductions for dependents abroad.

The deduction is actually going to knock down the tax burden for most middle class WORKERS abroad...doesn't do much for Retirees (who cannot work, at least in Malaysia). Sure wish I could exclude my rent ;-)

US Citizens HAVE TO file a tax return provided that their income exceeds the Personal and Standard Deduction. Under the new tax code that's $12,400 for individuals and $24,400 for couples. I don't know the specifics about your acquaintance. I send my forms in regardless as they deduct tax in advance from my pension and I usually get a refund. If I didn't submit I'd lose about $1000/year. https://www.irs.gov/pub/irs-pdf/p54.pdf

Gunnar45

Hi IVV,
MM2H may as you say, NOT be evidence by itself, but it helps :-)
I can only refer to my country of origin.
As long as my yearly visits there do not exceed a certain number of days then I am OK.
And I have a MY TIN number so the banks here are happy with that.

One must of coure act based on what ones home country requirments are and they can differ quite a lot.

StillSearching

Let's consider a scenario for expats, US citizens, and also retirees who live abroad for many years. It looks like they have to pay US taxes on their pension, medicare and any other forms of income generated in the US. Also if an income is generated abroad (e.g. from investment), they need to declare it to the US and possibly pay tax to the US on this too.
I understand paying taxes to a country where you live. But why do you want to be a citizen of a country which taxes you even if you don't live there and possibly never come back there to live?