Malaysia Public Ruling Tightens Tax Rules on Employee Secondments

• Public Ruling No. 5/2026 (effective 12 August 2026) clarifies when employee secondment is not subject to service tax under employment services.
• To qualify, all listed conditions must be met, including a secondment contract, temporary assignment, continued employment with the original employer, sole work for the host company, host company control, and cost-only salary recovery.
• New conditions include that the original employer must not be in the business of providing employment services, and the secondment must last less than six months in a year and not continue into the next year.
• If any condition is not met, the arrangement is treated as taxable employment services.
• Deloitte notes the ruling narrows the exemption and may create practical issues, especially for longer assignments.

Source: taxathand.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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