My tax knowledge is quite rusty by now. But when the work is done in Msia by a Msian tax resident, the income generated is definitely taxable in Msia. In terms of the structuring of the contract between you and your employer/client, you should consult tax consultants as the tax implication can be complex, not just for you but also for the entity you are providing service to.

My understanding is, generally people will set up a business (sole proprietor/LLP/Sdn Bhd) and have a contract with the foreign company, your expenses directly attributable to doing the work can be tax deductible as a result. someone told me something about resulting in permanent establishment of the foreign company if they hire a msian as employee in Msia, and therefore a contractor arrangement with a business is preferred. But like i say, consult a tax consultant to make sure you don't get into any type of trouble


Now, why should you declare? Well, tax evasion is an offense, you can get into lots of hassle and trouble if you don't do it right.
If this is a full time job and your main/sole income source, how can you justify your assets acquisition (think house, car, maybe shares too), IRB can pick it up and send your query and ask you to provide evidence of source of funds
Even if you don't bring the money back, with the TIN requirements that foreign banks are required to provide info the tax authorities, you might still get caught. Of course, that's if the amount is sizable.
If we are talking about small amount and you don't bring it back, then probably IRB won't be able to catch you

You would fill in Form B for income from business source if you use the method I suggest above.

Technically, the whole amount is taxable as the service is rendered in Msia