DIDO & Tax Residency

What is a DIDO? It is a schedule of DAYS-IN-DAYS-OUT, extracted from an expatriate’s passport for a calendar year. The DIDO tells the number of days an expat is physically present in Malaysia whether he is a tax resident or non-tax resident for that year of assessment. To be taxed as a non-resident means substantial taxes as employment income is taxed at a fixed rate with no personal reliefs. To be taxed as a resident means taxed at scale rates and enjoying personal tax reliefs. Section 7 of the Income Tax Act 1967 provides various situations where a person is a tax resident in Malaysia. Knowing well how these rules work and with the help of a DIDO can sometimes help pay less taxes. We have cases where an expat in his year of departure from Malaysia was earlier assessed as a non-tax resident but when we examined his passport and used the DIDO, found that he qualified as a tax resident in the year of departure. We were able to secure for the employer substantial refunds. Foreign companies sending their expats to work in Malaysia should understand how tax residency rules work in Malaysia to avoid unnecessary taxes being wrongly assessed on their expats.