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Malaysia

Financial Year – Based on calendar year basis for Individual and for companies based on financial / accounting year
Currency – Ringgit Malaysia

Corporate Tax Summary

Residence – Generally, a company is tax resident in Malaysia in a basis year (normally the financial year) if, at any time during the basis year, the management and control of its affairs are exercised in Malaysia. In practice, a company is regarded as resident in Malaysia if at any time during the basis period for a year of assessment, at least one meeting of the Board of Directors is held in Malaysia concerning the management and control of the company.

Basis of Taxation – Corporate income tax is imposed on income accruing in or derived from Malaysia. Income received in Malaysia by any person other than a resident company carrying on a business of air or sea transport, banking or insurance, (which are taxed on a worldwide basis) derived from sources outside Malaysia is exempted from tax.

Reference
Corporate Income Tax Rate (%) Resident – i) For Non-SME – 24% ii) For SME First RM 500,000 at 17% Remaining at 24% iii) Non-resident – 24% http://www.hasil.gov.my/…
Branch Tax Rate (%) 24%
Withholding Tax Rate:
Dividends – Franked Not applicable http://www.hasil.gov.my/…
Dividends – Unfranked Not applicable
Dividends – Conduit Foreign Income Not applicable
Interest 15%
Royalties from Intellectual Property 10%
Fund Payments from Managed Investment Trusts Not applicable
Branch Remittance Tax Not applicable
Net Operating Losses (Years)
Carry back Not permitted
Carry forward Limit to 7 years of assessment from the year incurred (except where there is substantial change in ownership of a dormant company)

Individual Tax Summary

Residence – Generally, an individual is a tax resident in Malaysia if the individual is present in Malaysia for 182 days or more during a particular calendar year.

Basis of Taxation – An individual (whether tax resident or non-resident in Malaysia) is taxed on any income accruing in or derived from Malaysia. Foreign source income is exempt in Malaysia.

Filing Status – 30 Apr – without business income, 30 June – with business income

 

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
5,001-20,000 1% 30%
20,001 – 35,000 3% 30%
35,001-50,000 8% 30%
50,001-70,000 14% 30%
70,001-100,000 21% 30%
100,001-250,000 24% 30%
250,001-400,000 24.5% 30%
400,001-600,000 26% 30%
600,001-1,000,000 24.5% 30%
1,000,000-2,000,000 28% 30%
2,000,000 and above 30% 30%

The rate of tax ranges from 0% to 30% for resident individuals and a flat rate of 30% for non-resident individuals.

Goods and Services Tax (GST)

Rate Not applicable – abolished since 1 Sept 2018
Taxable Transactions Not applicable – abolished since 1 Sept 2018
Registration Not applicable – abolished since 1 Sept 2018
Filing and Payment Not applicable – abolished since 1 Sept 2018

Other Taxes Payable

Tax Reference
Payroll Tax For employment income, on monthly basis employers will withheld tax from the employment income of their employees under a PAYE scheme and remit to the Malaysian Inland Revenue Board.
Transfer Tax No Transfer Tax except for Stamp Duty.

Stamp duty is chargeable on instruments.
i) For property transfer – Stamp duty is levied at rates between 1% and 4% of the value of property transfer
ii) For share transaction – 0.3% on share transaction instrument
iii) For service agreements and loan agreements – 0.5% on the value of the services or loans

Land Tax No Land Tax except for RPGT
RPGT (Real property gains tax) RPGT is imposed on disposers in the year of assessment where the disposal transaction takes place.
For gains arising from the disposal of real property situated in Malaysia is subject to RPGT up to 30%.
Sales tax Generally, sales tax is charged at the rate of 5%, 10% or a specific prescribed rate for goods manufactured in Malaysia or imported into Malaysia. Sales Tax is a non-creditable tax and any sales tax paid is a cost to the business.
Service tax Generally, service tax is charged at the rate of 6% on prescribed taxable services provided in Malaysia and any taxable imported services. The prescribed taxable services are listed in the Service Tax Regulations 2018. The service tax is a non-creditable tax and any tax paid is a cost to the recipient of the service.
Digital service tax Generally, digital service tax to be charged at the rate of 6% and levied on any digital service provided by a foreign registered digital service provider to consumers in Malaysia.

Last updated: 25.05.2020