Important MM2H Updates! Popular FAQs Answered!

Posted on Posted in MM2H, Penang, Property, Retirement, Tax

MALAYSIA MY SECOND HOME (MM2H): FREQUENTLY ASKED QUESTIONS, MAY 2018

It’s been months since I published our last MM2H FAQ. Since then, I’ve had an overwhelming number of questions from those of you seeking clarification as you consider making Malaysia your new home. As there have been many questions, I’m going to list the most common ones in our latest MM2H FAQ sheet, which I hope will help to ease the process for you!

 

  1. How do I qualify for Malaysia My Second Home (MM2H) if I’m under 50?

You need to demonstrate that you have the financial means by meeting the following requirements:

(i) At the application stage, show proof through your last three bank statements (prior to the application date) that you have:

  • the cash equivalent of RM500,000/- anywhere in the world. This means a fixed deposit, current or savings account and not shares or bonds.
  • an income equivalent to RM10,000/- per month anywhere in the world.

(ii) After you receive the letter of approval, you must place RM300,000/- into a fixed deposit account in a Malaysian bank. This amount can be taken from the RM500,000/- which you used to prove financial means. This money needs to remain in the account for the duration of your permit. Once the money has been transferred, you can get your MM2H approval stamp in your passport.

If you fully own a house or apartment in Malaysia worth RM1,000,000/- or above, with no mortgage, the fixed deposit can be reduced to RM150,000/- after the first year.

 

  1. How do I qualify for Malaysia My Second Home (MM2H) if I am over 50?

(i) At the application stage, show proof through your last three bank statements (prior to the application date) that you have:

  • the cash equivalent of RM350,000/- anywhere in the world. This means a fixed deposit, current or savings account and not shares or bonds.
  • an income equivalent to RM10,000/- per month anywhere in the world.

(ii) After you receive the letter of approval, you must place RM150,000/- into a fixed deposit account in a Malaysian bank. This amount can be taken from the RM500,000/- which you used to prove financial means. This money needs to remain in the account for the duration of your permit. Once the money has been transferred, you can get your MM2H approval stamp in your passport.

If you fully own a house or apartment in Malaysia worth RM1,000,000/- or above, with no mortgage, the fixed deposit can be reduced to RM100,000/- after the first year.

 

  1. Can I withdraw the fixed deposit under Malaysia My Second Home (MM2H) lien?

As a general rule, the fixed deposit should not be withdrawn until the termination of the MM2H permit. However, one year from the approval date, part of the deposit may be withdrawn if it is for medical expenses, your children’s education, or for the purchase or reimbursement of a house.

Individuals under 50 years of age can withdraw up to RM150,000/-, and individuals over 50 years of age can withdraw up to RM50,000/-.

 

  1. How long does the Malaysia My Second Home (MM2H) application process take?

A decision is given in approximately 4 to 5 months upon submission of a complete application. Recently, it has taken longer to approximately 6 to 7 months, supposedly due to a large number of applications.

 

  1. What are the benefits of Malaysia My Second Home (MM2H)?

(i) There are many benefits for the Malaysia My Second Home programme, such as:You will have permission to remain in Malaysia for up to 10 years. Please note that this duration is restricted by your passport’s expiry date. Once you have renewed your passport, you will be able to have the remainder of your MM2H term endorsed on it. This includes multiple entries and there is no requirement that you spend a minimum time in the country.

(ii) Dependants such as your spouse, parents (over 60) and children (under 21) can accompany you.

(iii) Land and property are governed by individual states. In general, foreigners are restricted to owning certain types of properties at certain price levels. On the island of Penang, for example,  foreigners can only purchase apartments and houses above RM1,000,000/- and RM3,000,000/- and above respectively. In contrast, MM2H holders can purchase up to two residential houses (excluding commercial properties and shophouses) or apartments at the lower threshold of RM500,000/-.

(iv) You can employ a foreign maid, subject to the current immigration guidelines on maids.

 

  1. What happens when a Malaysia My Second Home (MM2H) participant passes away?

If a MM2H participant passes away and his/her spouse wishes to stay in Malaysia, they must apply to the MM2H department to be named as the main participant. Upon approval, the fixed deposit must also be changed into his/her name. Depending on the dispositions in the participant’s will, the spouse may be required to show financial evidence that he/she has the means to continue under the MM2H programme.

If the spouse does not intend to stay in the country, then the executor or administrator can request to have the MM2H visa terminated. Two letters will need to be issued: one to the immigration authorities, and the other to the bank, requesting the release of the fixed deposit.

Of course, having an experienced Malaysian administrator can help to expedite this process.

 

  1. Do I need to show financial strength when I renew my 10-year MM2H visa?

The official MM2H website doesn’t mention it, however, you may be asked to show proof of the RM10,000- monthly income at the counter, upon submission of the 10- year renewal, and you will already have the MM2H fixed deposit under lien.

 

  1. How do I qualify to be a tax resident? How can I register myself to obtain a tax file in Malaysia?

As a country to emigrate to, Malaysia has many lifestyle draws (see below).  One such attraction is our territorial tax system. One pays tax only on income derived from Malaysia, and money brought in from abroad and derived from outside Malaysia is not taxable. This system has many advantages for foreign nationals looking for tax efficiency. I’ve had numerous queries on how to be a tax resident and how foreigners can open a tax file in Malaysia.

To become a tax resident, a foreign national needs to satisfy any of the following criteria:

  • Be resident in Malaysia for 182 days of the tax year;
  • Be resident in Malaysia for less than 182 days of the tax year, but have been resident in Malaysia for a total of 182 consecutive days linked to days from the year immediately preceding or following that tax year;
  • Be resident in Malaysia for at least 90 days of the current tax year and have been resident in Malaysia for at least 90 days in three of the four preceding years; or
  • Be resident in Malaysia in the year following and have been resident in Malaysia in the three years preceding the one being taxed.

To open a tax file in Malaysia, a foreign national needs to either purchase a property or derive income within Malaysia. For online registration please go to http://edaftar.hasil.gov.my

 

  1. Can an MM2H applicant bring in mentally ill adult son or daughter as dependant? (NOTE: UK uses that spelling, US with an “e”)

Yes, provided the applicant furnishes the supporting documents to MM2H department.

 

  1.  Is Malaysia My Second Home (MM2H) a PR? Does it allow the applicant to work?

Malaysia My Second Home doesn’t entitle you to Permanent Residence status or a passport but it does entitle you to part-time work if you fulfil the criteria.

 

  1. Does Malaysia recognise de facto/common law marriages/same sex marriages?

Unfortunately, Malaysia has yet to recognise such marriages, so for now, both partners would have to apply separately for MM2H.

 

  1. Duty free cars?

The MM2H department decided to abolish the tax incentive on the purchase of a new locally assembled vehicle or import of a pre-owned private vehicle into Malaysia under MM2H effective from 1st January 2018. Therefore, MM2H visas endorsed into the participants’ passports after 1st January 2018 will not qualify to apply for the tax incentive.The Ministry of Finance however extended the deadline for MM2H participants with MM2H visa endorsed before 31st December 2017 to submit for car tax exemptions (best to have it approved) before 31 December 2018.

 

    13. Increase in the financial threshold? 

We have been verbally informed by the MM2H department that approximately mid-2018, the cash minimum for the financial requirement for MM2H applications will be increased to RM600,000.00 instead of RM500,000.00 or RM350,000.00 (as the case may be) now and the subsequent Fixed Deposit (FD) placement will be increased to RM500,000.00 instead of RM300,000.00 or RM150,000.00 (as the case may be) now.

Good news: MM2H participants are allowed to withdraw up to RM250,000.00 from the RM500,000.00 (we were made to understand that this is after the first year – to be confirmed) for medical expenses, purchase of property and/or children’s education.

Some of the other amendments verbally mentioned to us are:

  • MM2H holders will be entitled to buy properties over RM1,000,000/- (this of course, will still be subject to the guidelines of the respective state where the property in located);
  • Applicants who are 60 years and above no longer need to show a recurring income of RM10,000/- a month;
  • MM2H holders will not be permitted to work in Malaysia.

Please note these are verbal updates so it would be advisable to wait for the official updates in writing.

 

As Malaysia My Second Home (MM2H) is a lifestyle visa, here are some links I’d like to suggest. They show the cultural, artsy & fun parts of Penang:-

https://penanglocal.com

http://samchoong.com/category/penang/

http://penangpropertyangel.blogspot.my

http://www.thepinghub.com

http://penangfoodie.com

http://Davidstloh.gallery & http://davidstloh.exposure.co

 

Author: Sam Choong

Sam Choong is a lawyer practising in Malaysia. His areas of practice include estate planning, wills and UK inheritance tax for expats residing or seeking to retire in Malaysia.

5 thoughts on “Important MM2H Updates! Popular FAQs Answered!

  1. Hey Sam. I have been following your FAQ on MM2H for long time as I am still in process of selling a property to comply with financial requirements. However now I’m in very interesting situation not knowing if the new rumored requirement changes will come into effect anytime soon. If so, then I would not sell my property as it will not be sufficient. But if there is no further progress on the said changes, then I would like to go ahead and sell the property, hold the money in bank for 3 months+ to get statement and apply. Any thoughts or advice? Thanks again for your time.

    1. Hi,

      Thanks for getting in touch. Great question!

      As we need some points clarified, we will contact you directly and take the conversation offline.

      Chat soon.
      Sam

  2. Hi!sam, i would like to ask what would happen to my fixed deposit in mm2h? Should i write a will to pass on the deposit to my best friend who is malaysian?

  3. Hi!sam,what would happen to my fixed deposit in mm2h if i pass away? Should i write a will to pass on the deposit to my best friend who is malaysian?

    1. Hi there,

      This is a great question and I thank you for asking because I suspect a lot of people out there have not thought about this. In Malaysia, we have a formula for distributing such assets belonging to someone who passes away. If you are Muslim it follows the principles of Faraid and if you are non-Muslim this is governed by the Distribution Act. In the case of non-Muslims, the Distribution Act distributes to your relatives depending on who these are so I would recommend a will especially if you wish to will your assets to a non family member. Make sure that the will is drafted carefully. I would approach a lawyer especially someone who is familiar with advising on multi jurisdictional matters.

      Best
      Sam

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