Professional Visit Pass Holders in Malaysia - Key Tax Risks and Compliance Considerations

Insights from Public Ruling No. 2/2026 - Tax Treatment of Foreign Nationals Exercising Employment in Malaysia

08/10/2026

Professional Visit Pass Malaysia tax treatment, employment income and DTA relief

Introduction

Cross-border assignments enable businesses to access specialist expertise, facilitate knowledge transfer and support projects in Malaysia. For multinational companies deploying overseas personnel, including under a Professional Visit Pass (PVP), immigration requirements and Malaysian tax implications should form an integral part of assignment planning.

Even a short-term assignment in Malaysia may give rise to Malaysian tax obligations, despite the individual remaining employed by an overseas entity and receiving remuneration outside Malaysia.

As a general rule, foreign nationals are not permitted to work in Malaysia without a valid pass or immigration authorisation permitting the intended activities, such as a PVP or an Employment Pass (EP). The appropriate authorisation must be obtained before work commences, and all activities undertaken must fall within its approved scope and comply with the applicable conditions.

The PVP, also known as Pas Lawatan Ikhtisas–Pakar (PLIK-Pakar), enables eligible foreign nationals to provide services or undergo practical training with a Malaysian company on behalf of an overseas company. The pass is generally granted for up to 12 months, subject to the applicable category and approval conditions. Approved activities may include professional services, technical support, training, or assistance with a specific project.

For technical experts and research assignments, the individual must remain employed by an overseas entity, which is responsible for paying their salary. The Malaysian company acts as the host and sponsor, without directly employing the individual. This differs from an Employment Pass (EP) arrangement, which generally involves direct employment with the Malaysian entity.

On 27 March 2026, the Malaysian Inland Revenue Board (MIRB) issued Public Ruling No. 2/2026, Tax Treatment of Foreign Nationals Exercising Employment in Malaysia. Effective from the year of assessment 2025, the ruling replaces Public Ruling No. 8/2011 and provides updated guidance on employment income, exemptions and compliance requirements.

For employers, Malaysian host entities and PVP holders, the key priorities are to determine where employment duties are performed, assess eligibility for domestic exemptions or treaty relief, and identify each party’s compliance responsibilities. Addressing these matters early can help manage tax exposure and reduce the risk of non-compliance.

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The PVP Framework

A PVP enables suitably qualified foreign nationals to provide services or undergo practical training with a Malaysian company on behalf of an overseas company. Valid for up to 12 months per issuance; the pass restricts work to the company named in the pass. Assignments may include technical support, installation, consultancy, and training.

While the PVP provides immigration authorisation for these activities, it does not, in itself, confer an exemption from Malaysian income tax. The tax implications of each assignment must therefore be assessed separately.

PVP Status Does Not Determine Taxability

Holding a PVP does not, in itself, exempt an individual’s employment income from Malaysian tax. Similarly, an overseas employment arrangement or payment of remuneration outside Malaysia does not automatically place that income outside the Malaysian tax net.

Public Ruling No. 2/2026 clarifies that employment income attributable to duties performed in Malaysia is generally deemed to be derived from Malaysia. This applies regardless of the employer’s location, where remuneration is paid, where the employment contract is executed, or the type of immigration pass held.

Applying for the 60-Day Exemption

Paragraph 21 of Schedule 6 to the Income Tax Act 1967 provides an exemption for qualifying non-resident individuals whose relevant employment period does not exceed 60 days. Eligibility is subject to the prescribed conditions, including rules on aggregating employment periods and assignments spanning two (2) successive years of assessment.

The employment period matters - Physical presence alone does not determine eligibility. In an example in the ruling, an individual is physically present in Malaysia for 59 days but receives remuneration for a 61-day employment period, including attributable leave. As the employment period exceeds 60 days, the exemption does not apply.

The exemption must be claimed in the Malaysian income tax return and supported by appropriate documentation. Employers and individuals should also assess repeat assignments collectively, as a subsequent visit may affect the exemption previously available for an earlier period.

Assessing Relief under a DTA

An individual who is a tax resident of a jurisdiction that has a Double Taxation Agreement (DTA) with Malaysia may qualify for relief under that agreement. Exemption from Malaysian tax on employment income generally requires all of the following conditions to be met:

The individual’s presence in Malaysia does not exceed the prescribed threshold, typically 183 days, measured over the period specified in the DTA;
Remuneration is paid by, or on behalf of, an employer that is not resident in Malaysia; and
Remuneration is not borne by a permanent establishment or, where relevant, a fixed base maintained by the employer in Malaysia.

Treaty provisions vary, and additional conditions may apply. Eligibility should therefore be assessed against the relevant DTA, taking into account the individual’s treaty residence, the employment arrangements and which entity bears the remuneration costs, including any recharge to a Malaysian entity.

Where the income is taxed in both countries, the availability of foreign tax credit relief should be assessed separately under the applicable rules.

MIRB Compliance Focus

Extract from MIRB correspondence highlighting tax compliance requirements for foreign nationals working in Malaysia

Source: Extract from MIRB correspondence. Identifying details have been redacted.

The MIRB notification letter reproduced below calls for compliance with the applicable tax deduction and payment requirements. It underscores the importance of correctly identifying the nature of each payment and the party responsible for meeting the related obligations.

Monthly Tax Deductions (MTD) may apply to employment remuneration, while withholding tax under section 109B applies to qualifying payments to non-residents, including certain service fees.

These obligations require separate consideration. Withholding tax on a fee paid to an overseas service provider does not, in itself, discharge the individual employee’s Malaysian income tax obligations. Businesses should therefore assess both the treatment of payments to overseas service providers and the tax position of individuals performing duties in Malaysia.

Practical Actions for Employers

Malaysian host companies should work closely with overseas employers and the individuals concerned to establish the tax position and coordinate compliance. Key actions include:

Assess the duties performed. Review the activities undertaken in Malaysia to determine the source and tax treatment of the related remuneration.
Track travel and employment periods. Maintain accurate travel records to assess tax residence and eligibility for DTA relief. Review the relevant employment periods separately when assessing the 60-day exemption.
Review cost allocation and recharges. Determine which entity bears the remuneration costs, including any amounts recharged to the Malaysian entity, and assess the implications for treaty relief and compliance.
Clarify compliance responsibilities. Identify each party’s obligations, including Tax Identification Number (TIN) registration, tax return filing, payroll deductions and employer reporting, where applicable. Ensure that exemption and treaty relief claims are supported by appropriate evidence.

Conclusion

Public Ruling No. 2/2026 – Tax Treatment of Foreign Nationals Exercising Employment in Malaysia reinforces that employment income is assessed by reference to where duties are performed, subject to the applicable domestic law and treaty provisions. A Professional Visit Pass (PVP) does not, in itself, exempt the holder’s employment income from Malaysian tax.

Employers and foreign nationals should review each arrangement to assess Malaysian tax exposure, eligibility for the 60-day exemption and the availability of relief under an applicable Double Taxation Agreement (DTA). Claims for exemption or treaty relief must meet the relevant conditions and be supported by adequate documentation.

The MIRB’s notification letter further highlights the need for a proactive approach to tax compliance under PVP arrangements. Employers, Malaysian host entities and foreign nationals should clarify their respective responsibilities and ensure that applicable tax registration, filing, deduction and payment obligations are met within the prescribed deadlines.

How Can Crowe Malaysia Help?

Cross-border assignments can create tax, immigration and compliance obligations well before an individual begins work in Malaysia. Crowe Malaysia’s Global Mobility Services (GMS) team brings together practical experience and local insight to help businesses assess PVP arrangements, identify potential exposures and establish a clear, coordinated compliance approach for both the organisation and its mobile employees. If you are planning a new assignment or reviewing an existing arrangement, speak with our GMS team today. Early action can reduce uncertainty, protect your business and give your people the confidence to move forward.