On principle, I have decided not to apply for the MM2H Programme

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Basically I am retired and have a net worth of around $650,000 (>RM 2 mil) and I was planning on applying for the MM2H programme. However, I dislike that they have made it compulsory to go through licensing agents. Now I need to fork up an additional RM 10,000 whether or not the application is successful. Why would they make it so hard for the applicant? They claim they want people who are financially well off to develop Malaysia into another hub in Asia, well if you want me why make me jump through hoops like this.

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Mourad,
I think you should write directly to the Ministry of Tourism and make this very point.

Nothing will change unless they know that people like you are being put off by this very unnecessary step. By all means let there be agents for those who wish to make use of their services (and quite a few do) but do not make it compulsory to use agents!!

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Not sure where Mourad is from but I would have thought it was a small price to pay for a tax free "environment". While I do think that the agent thing is a bit of a fiddle lets remember guys it is their ball and if we want to play in the game (i.e get the visa) we have to play by their rules.

cheers

brian

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Fully agree Brian.
The agent fee and the visa fee pale into insignificance compared to the potential gain on not having to pay tax on pensions for example.

However a genuine gripe is that the rules are constantly changing and are open to different interpretation by different Civil Servants. In other words there is a lot of ambiguity and grey areas, and it really doesn't have to be like that.

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HI FCS,

Entirely agree about interpretations but I have been coming here for the best part of 20 years or so and I cannot see it changing - can you? My friend here who  said no way will you like living here as I had lived in Singapore for a few years as he felt I could not handle the "unstructured" way of life. However, to be honest ( except for the driving which still gets my blood pressure up) I have got my head around it and accepted that is the way it will always be.

I feel that people like the chap who commented "on principle etc" is really just cutting of his own nose etc etc.

The great benefit for me is the tax savings which makes up for all the downsides also I only spend about 6 months of the year here as I travel a lot for my work - in the airport now on my way to Shanghai !

By the way this a great site and I really enjoy the comments and views. That fellow Scott is a goldmine of info.

Cheers

Brian

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Look on the bright side, Mourad, then you might reconsider your decision.

1) The agency costs are minor compared to the savings you get through the tax-free car purchase - typically 30-35% on the purchase price which the non-2nd Homer has to pay.

2) Why pick the MYR 10,000 agency fee when there are plenty of cheaper ones around?

3) For a small price (<USD 1000), you get to enjoy the pleasures this country has to offer: warm/sunny climate, fantastic food, friendly easy going folks, common use of English, low cost of living, etc. 

Ideally, the DIY option should have been retained but, then,  I'd be the first to say this is far from an ideal retirement location. Here you can expect to find  many of the drawbacks commonly associated with undeveloped countries. If you have other expectations, I'd advise you to look elsewhere. However, those who can adapt to living conditions here (the petty crimes, the atrocious driving habits, the bureaucracy, the occassional religious bigotry) may well find life here quite enjoyable.   

I'd be interested if you can nominate other retirement locations with comparable cost & living conditions.

Regards

PS: Thanks for a great site, Scott - only got to know about it & spent a couple of days reading everything.

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hi, Billjay,

I've moved your post to UK Government Pensions as you'll probably get a better response there.

hi, Mourad,

Why give up on MM2H for the sake of a few government hoops. Better to join the programme, and then join all of us in letting MoTour know that getting rid of the DIY option has really upset the customers.

The cheapest agent that we found was RM1250 and there's plenty more in the RM2,000 to RM3,000 range. And with about RM2 million you're loadsacash over the minimum financial criteria. Also, in the unlikely event that your application is rejected, the agents charge about RM800 for "administration costs."

MoTour made a mistake by withdrawing the DIY option. It probably knows it.

regards, Scott

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Hi Scott,

My question was about whether it's necessary to have a MM2H visa to qualify for the tax exemption in Malaysia. UK government pensions are a separate matter - the issue there is whether we can avoid UK tax.

Bill

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Hi Billjay,

Without an MM2H visa how can you "live" in Malaysia and be seen as a non- resident of the UK so that you don't pay tax? Unless of course you have PR then of course you would be liable for Malaysian tax. So I am not sure under what banner you could be other than MM2H.

There have been a number of post about "government pensions" which seem to point out the anomoly of these as the UK government seems to insist that these must be taxed at source. Not sure under what heading you can find this - I think it was on this site I read about it.

Cheers

Brian

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Hi Brian,

Residence is a question of fact. If with the normal 3 month visas you spend most of the year in Malaysia, you have to be resident in Malaysia for tax purposes. Malaysia is where my home is. My only home - not my Second Home.

Not everyone with a MM2H visa spends most of their time in Malaysia. It doesn't prove residence.

Legislation seems to suggest that overseas income isn't taxable in Malaysia. It doesn't say (as far as I can see) that you need to have MM2H visa. If that is the case, then one of the "advantages" of MM2H is available to everyone, whether or not they have the MM2H visa.


I can't be resident in the UK if I am rarely there and I don't own any property there. Usually I will be in the UK for less than 30 days each year. However from my reading of the UK-Malaysia Double Taxation Agreement I have to continue paying UK tax on my government pension.

Cheers,

Bill

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hi, Bill,

Residence is a question of fact. If with the normal 3 month visas you spend most of the year in Malaysia, you have to be resident in Malaysia for tax purposes. Malaysia is where my home is. My only home - not my Second Home.

I don't get it, surely not. Tourists aren't resident, they're transitory even if they don't transit much. The normal 3-month visas are social passes for tourists.

How are you going to register for tax purposes as a tourist?

And in order to take advantage (if any) of a double-taxation agreement you need to be registered for tax.

Residence is not a question of fact. It's a question of entitlement given by a particular visa. Social visit passes do not give any entitlement to residence, even if you reside here. I lived here for 8 years on a 3-month social visit pass (renewed every 4 months). A sort of "permanent tourist."

As Brian posted, the MM2H visa allows for registration for tax purposes as MM2H is a distinct category of visa holders along with (a) social visit passes, (b) work permits, (c) etc.  Each category has it's own rules.
 
That's how I understand it.  Malaysia is also my only home. I got tired of the 3-month pass and applied for MM2H.

regards, Scott

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Hi Scott,

I agree that tourists aren't resident but tourists don't buy homes and settle down here like you and I have.

When I registered at the Penang tax office and asked for the Double Taxation form to be signed, they weren't interested in whether or not I had a MM2H visa. They only needed to know my address, when I arrived in Malaysia and the dates of all my absences - ie they wanted how many days I had actually lived in Malaysia.

The UK tax leaflet IR20 states "To be regarded as resident in the UK you must normally be physically present in the country at some time in the tax year. You will always be resident if you are here for 183 days or more in the tax year. There are no exceptions to this. You count the total number of days you spend in the UK - it does not matter if you come and go several times during the year."
Malaysia follows the same rules. Residence IS a question of fact.

You can also satisfy the UK authorities that you are resident here without MM2H visa. Again I quote from the leaflet IR20 -
"If you claim that you are no longer resident and ordinarily resident, we may ask you to give some evidence that you have left the UK permanently, or to live outside the UK for three years or more. This evidence might be, for example, that you have taken steps to acquire accommodation abroad to live in as a permanent home, and if you continue to have property in the UK for your use, the reason is consistent with your stated aim of living abroad permanently or for three years or more. If you have left the UK permanently or for at least three years, you will be treated as not resident and not ordinarily resident from the day after the date of your departure providing
•   your absence from the UK has covered at least a whole tax year, and
•   your visits to the UK since leaving
- have totalled less than 183 days in any tax year, and
- have averaged less than 91 days a tax year"

I sold my house in the UK and bought a place here. That proves I intend to live here permanently. The MM2H visa allows entry to Malaysia but doesn't prove that you actually reside here.

Regards,
Bill

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That's interesting you were at the Pg tax office....
We went twice in our first year to inquire about filling the tax return. First time and second time the same result - we weren't convinced the first time that's why we went again. We told them we're MM2H participants,they just smiled at us and two different officers told us not to bother since we're not working and don't have an income.

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I went to the tax office to have the Double Taxation form signed and was told I needed to get a tax reference first. This was issued without any mention of MM2H. I don't think I need to fill in a tax return.

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They weren't interested in giving us a tax reference either. They said since we don't have the tax reference and no income we don't have to worry about filling any yearly tax forms. Since we don't need the double taxation forms as we're not Brits, and we've been non-resident for tax purposes in our own country as we've left some years ago, we just left it at that.
So what's the tax reference for if one does not need it for double taxation proof and no income locally?
(sorry if it sounds like a stupid question...I'm just puzzled)