20 April 2011

It’s hard to bring expats back - The Star, 18 April 2011

I REFER to “15% income tax rate ‘not a game changer’” (The Star, April 16).
The 15% income tax rate for returning expats will only attract those whose contract overseas have expired or are about to retire. It is unlikely to bring many home as it is not a big incentive.
Furthermore, only those meeting the minimum requirements of stay overseas qualify: two years for a PhD holder, four for a Masters holder, six for a first degree holder and 10 for a diploma holder.
And even if they meet the requirements, they may not want to return as they will lose too much.
A returning expat Malaysian who earns, say, RM10,000 a month equivalent overseas – like in the Middle East, where there is no tax – will immediately take home 26% less, being 15% tax and 11% EPF deduction.
And he or she will have to fork out for accommodation, utilities and schooling, which are paid for by the employer overseas. Which means those returning can expect to take a pay cut of at least 30% to 40%. And those coming back may not want to continue working as they would already have plenty to retire on.
Abu Dhabi.

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