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Malaysia Taxation

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With our team of trained tax professionals, who have extensive experience and knowledge in Malaysia and International Taxation, rest assured for we provided a broad range of corporate taxation services in Malaysia to assist various Multi-National Corporations.

We will keep our clients updated on the Malaysia tax regulations (including Budget updates) that may affect your company’s compliance requirements. Our company would also monitor the statutory deadlines and working closely with your company to meet the compliance filing deadlines. The preparation and filing for tax would also be  of an estimated chargeable income which has to be filed within three months from the accounting year end.

Malaysia Tax Advisory

Corporate Tax

Corporate tax rates for companies resident in Malaysia:

  • 25 percent (24 percent from YA 2016)

Special tax rates for companies resident in Malaysia with ordinary paid-up share capital of MYR 2.5 million and below at the beginning of the basis period for a year of assessment (provided not more than 50 percent of the ordinary paid-up share capital of the company is directly or indirectly owned by (or linked to) a related company which has an ordinary paidup share capital of more than MYR 2.5 million at the beginning of the basis period for a year of assessment):

  • 20 percent on the first MYR 500,000 (19 percent from YA 2016)
  • 25 percent on every ringgit exceeding MYR 500,000 (24 percent from YA 2016)

A company will be a Malaysian tax resident if at any time during the basis year, the management and control of the company’s business or any one of its businesses are exercised in Malaysia.

Companies, limited liability partnerships, trust bodies and cooperative societies that are dormant and / or have not commenced business are required to furnish the ITRF (including Form E) with effect from Year of Assessment 2014.

For further reference please refer Filing Programme for Return Forms in the Year 2015

Every taxpayer who is liable to tax is required to declare his income to IRBM. The taxpayer is responsible for:

Obtaining and forwarding Income Tax Return Form (ITRF).

A company has to send or return the ITRF that has been duly filled, without attached documents, to the address below within 7 months after the close of the accounting period.

Information Processing Centre
Inland Revenue Board of Malaysia
Ground Floor, Menara Hasil
No. 3, Jalan 9/10
Seksyen 9
43650 Bandar Baru Bangi
Selangor Darul Ehsan

Supporting documents need not be enclosed, except that in repayment cases, dividend vouchers need to be enclosed with the ITRF.

  1. Submitting tax estimation and paying installment within the stipulated period
  2. Computing the company income tax
  3. Declaring income and expenses including deductions and rebates.
  4. Keeping records for audit purposes

 

 

Personal Income Tax

The top rate of personal income tax in Malaysia is 26 percent and applies to income greater than MYR 100,000.

  • From YA 2015, the maximum income tax rate will reduce to 25 percent, and it will apply to chargeable income of MYR 400,000 or greater.
  • Non-residents are taxed at a flat rate of 26 percent (pending issuance of the Finance Bill) on gross income from all sources.

There is no general social security framework in Malaysia. However, mandatory contributions are made monthly by both the employer and the employee to the Employees’ Provident Fund which serves as a compulsory savings and retirement plan. In addition, where an employee earns less than MYR 3,000 per month, both the employer and the employee must make monthly contributions to the Social Security Organization which serves to provide certain benefits to employees in cases of employment injury.

Every individual who is liable to tax is required to declare his income to IRBM. The taxpayer is responsible for:

Obtaining and forwarding Income Tax Return Form (ITRF):

The taxpayer has to send or submit the ITRF that has been duly completed before 30th April every year to the address below:

Information Processing Department
Inland Revenue Board of Malaysia
Ground Floor, Menara Hasil
No. 3, Jalan 9/10
Seksyen 9
43650 Bandar Baru Bangi
Selangor Darul Ehsan

Personal Income Tax Rate in Malaysia

Individual income tax Progressive rates from 0% to 26%
Up to MYR 2,500 0%
MYR 2,501 – 5,000 1%
MYR 5,001 – 20,000 3%
MYR 20,001 – 35,000 7%
MYR 35,000 – 50,000 12%
MYR 50,000 – 70,000 19%
MYR 70,000 – 100,000 24%
MYR 100,000 and over 26%

Expatriate Tax

Liable to Malaysian tax when it carries on a business through a permanent establishment in Malaysia and assessable on income accruing in or derived from Malaysia.

Non-resident Tax rate
Types of income Rate (%)
Business
Rental
25
Dividend (Franked)
Dividend (Single tier)*
25
0
Entertainers professional income 15
Interest 15
Royalty 10
Special classes of Income:
  • Rental of movable property
10
  • Fees for technical or management services performed in Malaysia
10
  • Payment for services rendered in Malaysia in connection with use of property or installation or operation of any plant, machinery or other apparatus purchased from a non-resident person
10
Real Estate Investment Trust (REIT)
  • Other than a resident company
10
  • Non-resident company
25
  • Foreign investment institution
10
Effective from 01/01/2007

 

*With the introduction of the single tier dividend system effective 1.1.2008, all dividends are tax free in the hands of the shareholders. However companies with section 108 credit under the old imputation system are given a transitional period until 31.12.2013 to frank normal dividends so as to enable them to exhaust their section 108 credit.

Other taxable

Property taxes

Local councils may impose a levy rate (commonly known as ‘land tax’) on residents in respect of services provided by the local council. The amount varies from council to council and is dependent on the value of the property. Quit rent is a form of tax imposed by the State Government. It is imposed on owners of landed property (as opposed to units in high-rise building). The amount of quit rent imposed varies from state to state and will depend on the locality and category of land use.

Import Duty

Import duty is generally payable on imported goods at the time of clearance from Customs’ control. The rates of import duty generally ranges from 0 percent to 60 percent depending on the category of goods imported. Malaysia is committed to ASEAN and as such, import duties imposed on most manufactured goods of ASEAN origin have been reduced to a range of 0 percent to 5 percent.

Export Duty

Export duty is generally imposed on depletable resources to discourage export of such commodities.

Excise duty

Excise duty is a domestic tax imposed on a limited range of locally manufactured goods or goods imported into Malaysia. The rate of tax to be levied varies and would depend on the nature of the goods manufactured or imported. Excise duty is generally levied on alcoholic beverages, tobacco products and motor vehicles.

Inheritance / gift tax

There is no inheritance or gift tax in Malaysia.

Record Keeping

Taxpayer is required to keep the following documents for 7 years:

  1. EA/EC Form
  2. Original dividend vouchers
  3. Insurance premium receipts
  4. Books purchase receipts
  5. Medical receipts
  6. Donation receipts
  7. Zakat receipts
  8. Children`s birth certificates
  9. Marriage certificate
  10. Other supporting documents
  11. Working sheets (if any)

 

The calculation of the 7-year period begins from the end of the year in which the ITRF is filed.

Self-Assessment System (SAS)

Tax administration under SAS is based on the concept Pay, Self Assess and File

Pay: Monthly salary deductions are made for individuals having employment income, or through instalments for individuals having business income.

Self Assess: Taxpayers compute their own taxes.

File: The ITRF is submitted to the IRBM together with the payment for the balance of the income tax payable to meet any shortfall in the monthly payments or a claim for repayment if there is an overpayment.

Corporate Tax Compliance in Malaysia has become more complex under the regulatory scrutiny of the Inland Revenue Board Of Malaysia. Paul Hype Page ensure both your company and your compliance meets to the standard required in submitting for Corporate Tax in Malaysia.

 

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