# Remote working for UK company in Malaysia



## MovingAt40 (8 mo ago)

Hi all,

I am currently working for a UK company and am looking to move to Malaysia. My employer has expressed interest for me to continue working with them remotely from Malaysia. 

However, they do not have a branch/office in Malaysia so I am not sure if I can be on their payroll and may need to go down the consultant route. Does anyone have any comments on this?

Will I be subject to withholding tax in the UK?

If I go down the consultant route and set up my own company/trade as a sole proprietor, I will be submitting tax returns based on the income I earn as a consultant. Will the income be deemed as arising from UK or Malaysia?

Are there any tax issues I need to consider?

Thanks


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## Harry Moles (11 mo ago)

If you are living in Malaysia, then the income originates in Malaysia and presumably Malaysia will want you to pay income tax.


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## Moulard (Feb 3, 2017)

If you work as an employee, your income will be considered sourced in Malaysia as you performed the work in Malaysia and Malaysia will have the primary right to tax it.

Under Malaysian tax law your employer may be required to set up a foreign branch to deal with things like Malay income tax withholding, GST etc. by Malay tax authorities

If you contract as a sole trader your income will be considered sourced in Malaysia as you performed the work in Malaysia.

If you set up a company in Malaysia they the company will be considered to have permanent establishment in Malaysia and it would pay tax on its global income and you would pay income tax on the wages the company pays you. Technically you could set up a UK foreign branch and then income with UK economic benefit from the UK foreign branch would be considered UK sourced.

If you would still be considered domiciled in the UK, then the UK-Malaysia tax treaty may override some of this, or at the very least address some of the double taxation that may result.

If UK tax law requires income tax withholding from non-resident employees then they will likely do that and you would have to file an income tax return to claim a refund each year in part or in full depending treaty terms.

Its worth noting that the relief of double taxation clauses in most treaties result in you paying the higher of the two tax rates sometimes split between the two countries.


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## RemoteWorker96 (3 mo ago)

According to the OECD and bloomberg tax, if you work for an external company (UK) but live in Malaysia, you will not pay tax for the first 183 days. You then lose tax residency in the UK and things get complicated.

I am sure you could then volunteer to pay tax in Malaysia.

The contentious issue at the moment is if your company would then become liable to pay tax in Malaysia.

According to article 5 and article 7 of the OECD Model Tax Convention on Income and on Capital report, if you are working from a home office, it will not be classed as a permanent presence for your company as long as they don't have access to your property and don't pay your rent or bills.

There are a lot of grey areas here and I am no expert. I am still researching this as I am planning to move to Malaysia too.

Let me know if you have had any further developments. I will keep you guys up to date too.

Bloomberg Tax Article
OECD Report (Read Articles 7 and 5)


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