Last updated: July 2026
Short answer: yes, in most cases. Malaysia exempts resident individuals — including MM2H visa holders — from tax on foreign-sourced income, and this exemption now runs until 31 December 2036. But the exemption is conditional, not automatic. It only applies if the income was already taxed in the country where it was earned, and you must declare it in your Malaysian tax return.
Holding an MM2H visa does not by itself decide your tax status. What decides it is how many days you spend in Malaysia.
What counts as foreign-sourced income
Pensions, rental income, dividends, and business profits earned outside Malaysia all fall under this exemption, as long as they meet the conditions below. Interest earned on the MM2H fixed deposit held in a Malaysian bank is treated separately and is also not taxed.
| Question | Answer |
|---|---|
| Are MM2H holders automatically Malaysian tax residents? | No. Tax residency needs 182+ days of physical presence in Malaysia in a calendar year. |
| Is foreign pension/rental/dividend income taxed once remitted to Malaysia? | Not if it was already taxed “of a similar character to income tax” in the source country, and you are a tax resident. |
| Is interest on the MM2H fixed deposit taxed? | No. |
| Does keeping money in an overseas account count as remittance? | No. Remittance means bringing it into Malaysia — bank transfer, paying Malaysian bills with it, or bringing in proceeds from a foreign asset sale. |
| Until when does this exemption run? | 31 December 2036, under Budget 2026. |
| Do I still need to report it? | Yes. You must declare the exempt income in your tax return and keep proof it was taxed abroad. |
Frequently asked questions
Does the MM2H visa itself make my foreign income tax-free?
No. The visa and the tax exemption are separate. The exemption comes from Malaysia’s general tax rules for resident individuals, which MM2H holders can benefit from once they meet the residency test.
What if I only visit Malaysia occasionally and don’t hit 182 days?
Then you are likely a non-resident for tax purposes, and different rules apply. Speak to a licensed agent or tax advisor before assuming either way.
What happens when the exemption eventually expires?
As of Budget 2026, the government pushed the expiry from 2026 out to 2036. Tax rules can still change before then, so this is worth checking again closer to the date, not something to assume is permanent.
Do I need to prove my foreign income was already taxed?
Yes. Keep the foreign tax documentation. The exemption only holds if the income was subject to tax “of a similar character to income tax” in the country it came from.
Is this the same for all MM2H tiers — Silver, Gold, Platinum, SEZ?
Yes, the foreign-sourced income treatment is not tier-specific. It follows the general resident individual rules once you qualify.
This is general information, not tax advice. Malaysian tax rules on residency and foreign income have conditions that depend on your personal situation. Ask us first — the first conversation with our licensed team costs nothing. WhatsApp +60 10-351 9155