The Ministry of Home Affairs (MOHA) has announced that a revised expatriate salary policy for Employment Pass (EP) Categories I, II, and III will be implemented effective 1 June 2026, following Cabinet approval on 17 October 2025.1
WHY THIS MATTERS
The revision will substantially impact multinational organizations and globally mobile employees seeking to obtain or renew Employment Passes in Malaysia. Failure to meet the new criteria may result in application rejections or delays, affecting assignment planning, talent acquisition, and retention.
Background
The previous expatriate salary policy was based on the Economic Council’s decision dated 20 December 2016. Since 2022, MOHA has conducted structured engagements with industry stakeholders to strengthen the policy, aligning it with the Thirteenth Malaysia Plan (RMK-13) objectives to reduce reliance on foreign labour and prioritize the employment of qualified local talent.
The revision is not intended to restrict the employment of expatriates but to ensure that the expatriate’s employment genuinely complements and catalyzes the development of local capacity.
Key Developments
Effective 1 June 2026, Malaysia will implement new minimum salary thresholds and a structured employment duration framework for all new and renewal Employment Pass applications.
Revised Minimum Salary Thresholds and EP Duration
- Category I: Minimum salary increased from RM10,000 to RM20,000 (up to 10 years).
- Category II: Minimum salary increased from RM5,000–RM9,999 to RM10,000–RM19,999 (up to 10 years with succession plan).
- Category III: Minimum salary increased from RM3,000–RM4,999 to RM5,000–RM9,999 (up to 5 years with succession plan).
Scope and Implementation
- Applies to all new and renewal EP applications submitted on or after 1 June 2026.
- MOHA will hold engagement and consultation sessions for stakeholders to clarify requirements and implementation mechanisms.
Government Commitment
- Policy enhancements will be implemented gradually, balancing national interests, economic growth, and local human capital development under the Malaysia MADANI principles.
Support and Further Information
- FAQs available from MOHA.
- MYXpats Helpdesk: helpdesk@myxpats.com.my / +603-7839 7171.
- eXpats Helpdesk : expatctr@mdec.com.my / +603-8325 3106.
KPMG INSIGHTS
The significant increases in salary thresholds and introduction of employment duration frameworks for EP categories represent a strategic shift to encourage local talent development and reduce reliance on foreign labour. Organizations may face higher assignment costs and need to review compensation structures and succession planning for affected roles. The requirement for a succession plan in Categories II and III may add administrative and compliance complexity.
In light of the changes, organizations may wish to:
- Audit existing and prospective expatriate contracts for alignment with new salary requirements.
- Update mobility policies and assignment budgets accordingly.
- Prepare succession plans for EP Categories II and III as required.
- Attend MOHA engagement sessions and consult MYXpats Helpdesk for compliance clarification.
What’s Next?
Further announcements may be issued regarding transitional regulations for existing expatriates.
Besides the revision of the EP requirements, similar changes are also expected to be introduced for the Resident Pass–Talent (RP T), although no official announcement has been made yet. RP T holders or interested applicants are encouraged to monitor new announcements to ensure continued eligibility.2
Readers may wish to contact their usual immigration adviser, tax services or employment law professional, or a member of the KPMG team in Malaysia (see Contacts).
FOOTNOTES:
1 Expatriate Services Division, “REVISED EMPLOYMENT PASS SALARY POLICY EFFECTIVE 1 JUNE 2026” and eXpats, Malaysia Digital Economy Corporation, “Revision to EP minimum salary,” published in January 2026.
2 Also see, RP-T, TalentCorp.
Contacts
Disclaimer
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in Malaysia.
GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2026 KPMG Tax Services Sdn Bhd, a company incorporated under Malaysian law and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved