"Baseline: it's 182 days in one stretch without breaking either in H1 or H2 of that particular year with 14days social Visit but not necessarily. Hope this helps"
I think that is incorrect. One can qualify for tax residency for ANY 182 days in a calender year.The consecutive day rule is only relevant if you have less than 182 days in one year but have the 182 days in a preceding or following year.
The first thing to remember is that you must qualify already as a tax resident to link.
"7. (1) For the purposes of this Act, an individual is resident in Malaysia for the basis year for a particular year of assessment if –
(a) he is in Malaysia in that basis year for a period or periods amounting IN ALL to one hundred and eighty-two days or more;"
Note the statement "a period or periods". The term does not require this be a single continuous period. That would certainly apply for his qualification for this year since he did not qualify under (A) for his previous year. Somehow he must gain tax residency for that initial year by actually spending the time in Malaysia.
The second way to qualify for tax residency is if you have already fulfilled status (A) and want to extend that to a year in which you have fewer than 182-Days. If A then B, maybe. Or the other possibility is no A the previous year...but you have 182 days of continuous residency.
"(b) he is in Malaysia in that basis year for a period of less than one hundred and eighty-two days and that period is linked by or to another period of one hundred and eighty-two or more CONSECUTIVE days (hereinafter referred to in this paragraph as such period) throughout which he is in Malaysia in the basis year for the year of assessment immediately preceding that particular year of assessment or in that basis year for the year of assessment immediately following that particular year of assessment:
Provided that any temporary absence from Malaysia—
(i) connected with his service in Malaysia and owing to service matters or attending conferences or seminars or study abroad;
(ii) owing to ill-health involving himself or a member of his immediate family; and
(iii) in respect of social visits not exceeding fourteen days in the aggregate,
shall be taken to form part of such period or that period, as the case may be, if he is in Malaysia immediately prior to and after that temporary absence;"
So in this case - if one has >182-Days in 2023...one can qualify for tax residency the preceding or following year provided that one can link your days in those years to a CONSECUTIVE period totaling 182 days of residency.
Easy example. Let us say I'm in Malaysia from July through December 2022 (184 days) -> I'm already a Tax resident for that year...I stayed another month in Malaysia in January 2023. Since I did not take a holiday in that period I would also gain tax residency status for 2023. In fact, I could even have taken a holiday in January 2023 of 14 days of less. That's because the 17 days I WAS RESIDENT in late January still would link to my earlier year and give me enough consecutive time (Note: I did not violate the out-of-country rule).
The trap here is if I had taken a full month off in November 2022. I would not have the 182 days for 2023 if I took such a long holiday . So I would lose tax residency status unless I had accumulated days earlier in the year 2022.
Let's say I still qualified for the >182 days (non-consecutive) because my total days were enough in the calender tax year though. Maybe I had forgotten I had spent a a month in early 2023 in Malaysia (so March [gap April-June] then July-October [gap November] and then December. That's 185 days...
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But how does that 1 month holiday impact my linking for 2023??? My counting for consecutive linking days would only begin in December 2022 (after the disqualifying long holiday). I can only use that one early January 2023 holiday (14 days or under) ...so my consecutive period would not be fulfilled if I take another holiday. I have one month (Dec 1-31, 2022 = 31 days) broken by an early mid january two week holiday (-14 days) then returning from mid-January (@17 days) then Feb 1, 2024 to July 15, 2024 (150 days). So the total consecutive days of 182 could be linked to fulfill both years (if you had not already qualified).
But if you took another holiday you'd have to simply get the >182 days. So beware taking more than one 14-day holiday in any 196-day cycle period unless you can really assure that you can fulfill the 182 day minimum in BOTH years.
