In an attempt to woo Malaysians living abroad to return serving the country, the government will impose a 15% income tax rate for a period of five years.
The Prime Minister, Datuk Seri Najib Tun Razak announced the scheme, which forms part of the Returning Experts Programme, in the hope that the expertise of the Malaysian professionals overseas can be brought back home.
It is believed that the number of Malaysians living abroad, spanning across many regions and countries, is in excess of 700,000. Out of the over 700,000, more than 300,000 are in Singapore, followed by Australia with about 80,000. Other popular destinations for Malaysian expats include Brunei, United Kingdom, USA, Philippines, Indonesia, India and Germany.
Bringing Malaysian expertise home from abroad has been a challenging endeavour for the government, and the predicament certainly gets the country leadership scratching their heads. There appears to be a significant degree of reluctance for Malaysians living overseas to return home, which is contributed by a number of factors.
Some of the concerns of those thinking to go back to Malaysia include the escalating cost of living, low buying power, high crime rate, questionable institutional systems, as well as incessant and never-ending political saga.
This income tax reduction is not the first incentive offered by the government, nor will be the last.
Since 2001, the Malaysian government has been stepping up the effort to lure Malaysians abroad back into the country. Some of the earlier incentives include a 2-year tax exemption, duty-free vehicle shipment (up to two vehicles), and PR status within 6 months for non-Malaysian spouse.
As of late 2010, it is reported that the number of them returning was less than 1% – a disappointing figure.