Let me give you a little background on myself.
Hello, my name is Mike. I'm a Senior PCB Designer living in Wisconsin, USA. In 2005 my company sent me to Penang, Malaysia for a 3 month assignment, I came back home for a month and then went back for another 3 month assignment. Since that time I've expressed interest to my company in going back to Penang. My company has now approached me with a long term transfer for 3-5years. I say transfer because they're not calling it an expat position. I believe that because I've expressed a desire to go that they are pulling back on some of the benefits and calling it a transfer. I'm hesitant to accept because basically only travel will be paid for. No Housing, No Auto no weekly expense. Only that I'll be paid in USD at my current salary. I believe they're trying to use that as leverage, telling me that because I'll be saving so much money that I shouldn't be compensated additionally. not their exact words, but you get the point.

So I'm at the point where I might take this and I want to start looking at other expat positions.

Questions for everyone:
Does it sound like a good deal to you to stick with my current employer and go to Penang?
What kind of benefits and compensation should I be asking for?
Does anyone know of any other expat jobs that offer for my position?

I'm basically open to going anywhere, but would love the Southeast Asia region. And I love Singapore but can't find any expat positions there. They seem to only hire Singaporeans.

Thanks,
Mike

Legally, once you are in a place for a year, your expenses are no longer deductible as business expenses. If you were sent to Florida for an 18-month assignment, starting with the 13th month, thing such as a rental car and housing could not be deducted as business expenses because you would have become what is called 'compensatory'. I worked for one of the large consulting firms, and everyone was transferred at the end of one year because of this. If they continue to provide them, that becomes income to you, and you must pay income tax on it. If you are sent with the intention of staying longer than a year, that is a transfer, not a business trip. They are not trying to cheat you, they are just following the law.

If you were going to a more expensive country, such as Germany, they would make up the difference in cost of living to you, possibly by providing a housing allowance and a car, but it would all be taxable income to you.

If you thought you were going to make a killing by collecting your US salary in a less expensive country, plus have your basic living costs covered, you were confused. That only happens on business trips. If that was the reason you wanted to get a longer assignment, I doubt you will be happy living there, and you should probably change your mind about the assignment.

To check this out, contact a tax preparer or attorney who is familiar with international transfers.

It sounds like what you're being offered is, indeed, a genuine "transfer" rather than an "expat assignment." When I was first overseas, it was referred to as "being on the local payroll" - though you say you'll be paid in US dollars and that may be the one complication you want to check out thoroughly before you agree.

Being out of the US for a period longer than one year means that you will be able to exclude your salary from US taxation, thanks to the "overseas earned income exclusion." What that should also mean (and this you need to check) is that you will then become subject to whatever payroll deductions and local taxes the folks in your Penang office would normally pay. In essence, you should expect to pay Malayan income taxes and be subject to the Malayan social insurances system, whatever that may include.

Here's where you need to negotiate for benefits - is there a national health care program there? If not, will your employer provide some form of health insurance that will cover your costs over there? (Just continuing you on the US health care package may not do you any good, except when you return.)

What about social security (in the US) or any retirement funds you may be in (401K?)? - Will those be continued while you are overseas or not? (Can be a problem as you can't contribute to a deferred retirement fund if you don't have earned and taxable income for US purposes... and if you expect to exclude your foreign income, then you can't contribute to the retirement fund while you're away.)

It would certainly be simpler to consider taking the transfer on a genuine transfer basis (i.e. getting paid by the Penang office, on the local payroll) and not trying to negotiate the quasi-expat package stuff. It also puts you on a slightly surer footing while you are there. No worries about the US dollar melting down - a common expat concern, especially right now. The down side is that someone with your qualification may not get paid nearly as much over there as you've been paid in the US. It's still up to your employer to handle the visas and work permits (a significant contribution!).

Anyhow, that's a start. Good luck with your decision and keep us posted as you progress.
Cheers,
Bev

Synthia,
Thanks for pointing out the over 1 year rule. I did not know that. Although, I would rather pay income taxes on the value of housing provided than pay for the housing itself. But I realize what you're saying and it does make sense.

Bevdeforges,
I hadn't realized all the payroll questions.

I'm compiling a huge list of questions for my employer to answer.

Thanks for the input, that's why I came. I'll keep posting on my situation as I find out more.

I think Bev went overseas to a country where there is a tax treaty. You need to check that out, too.

It isn't so much whether you would rathe pay taxes as whether your company is willing to go to a lot of extra trouble to keep the proper records. One thing you should ask for is a tax preparer paid by your company.

Malaysia does have a national health system, but many companies provide insurance so that you can get private care. I was in a private hospital, Loh Guan Lye, when I was there. I asked the doctor what sort of treatment I would have had at the government hospital, and he said, "The same, with a lot more waiting." I was sent to them originally by a doctor who suspected heart trouble, and he wanted me to see a particular doctor. Otherwise, I probably would have done the waiting and paid the minimum fees they charge foreigners.