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Foreign Worker Tax Increase Scrapped In Malaysia

by Mary Swire, Tax-News.com, Hong Kong

06 May 2009

The Malaysian Cabinet has scrapped plans to introduce an increase to the tax levy paid by restaurant and factory owners for the employment of foreign workers.

According to the country's Human Resource Minister, Mr S Subramaniam, pressure from industries concerned has led the government to review the situation, with the conclusion that imposing an increase to the foreign worker tax now would be inappropriate considering the current economic climate.

Restaurant and factory owners expressed fears that additional taxes at present would force them to make up to 400,000 people redundant as they struggled to balance the extra costs.

The government taxes businesses for the employment of migrant workers, the majority of which usually come from India, Indonesia and Bangladesh in search of employment, usually within the catering and construction industries.

The Cabinet has stated that, at present, it has no immediate plans to try and reintroduce the tax hike at a later date.

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