We all know that in this current world, payment of taxes is mandatory with tax registration is required by the law in most countries. This enables the government bodies to keep track of individuals who are required to pay taxes to the relevant tax authorities in the country.
By registering, the authorities are better equipped when handling tax crimes such as fraud or evasion, while at the same time understand the origin of the taxable income.
Tax Registration in Malaysia
The Inland Revenue Board of Malaysia (LHDN) assigns a unique number to every individual that has registered their tax. As the income earned over the year of assessment differs across every individual, the amount of taxes payable is different as well.
NOTE: Each number is unique and generated according to the nature and identity of the individual
Taxpayers who intend to register for an income tax number may do so by filling up softcopies or hardcopies forms. The softcopies can be obtained from the LHDN’s website while hardcopies can be obtained from the LHDN’s branches located throughout Malaysia.
Here are the 2-step process for your tax registration in Malaysia:
Step 1: Those who are to be taxed for the first time must register an income tax reference number before proceeding as mentioned above.
Step 2: When registering, the taxpayer is required to bring along the following items:
Latest salary statement / payslip
Those who are applying for e-Filing for the first time must also apply for a personal identification number (PIN) number at an LHDN branch. A PIN is required by those who are logging in for the first time.
RECOMMENDATION: As taxation-related information is very complicated and troublesome to deal with, we highly recommend hiring a tax agent to solve all your tax queries and prevent any tax complications, which may result in unnecessary tax expenses!
Once registered, the income tax number will be provided within 3 working days.
What Are the Documents Required for Filing of Taxes
After tax registration, the next step is to file your taxes. Some of the documents and information required include, among others:
Employees’ Provident Fund (EPF) statement
Any receipts available to claim any reliefs, rebates, or exemptions
What Are the Forms Required for Payment of Taxes?
There are several forms for the payment of taxes. These forms depend on the taxpayer’s source of income and status as a tax resident. Here are the respective forms required for the different groups of tax payers:
Type of Taxpayers
Employed resident individuals
Resident individuals who own & run a business
Resident individuals who are knowledge workers
Non-resident individuals who are either employed or own & run a business in Malaysia
Non-resident individuals who are knowledge workers
Every taxpayer must log into the tax account and pay the tax amount stated before the due date. The amount to be paid will be calculated automatically once the details of the income has been received by the authorities.
Role of LHDN in Tax Registration in Malaysia
If you’re interested in knowing more about the LHDN, this is for you!
The LHDN was established on March 1, 1996, and to date, LHDN is responsible for the collection of revenue for the Ministry of Finance (MOF). The MOF is the governing body responsible for the management of all government’s revenue and expenditures.
One of LHDN’s main responsibilities is the improvement and effectiveness of tax administration in Malaysia. There are a total of six government acts guiding the actions of LHDN which includes:
Petroleum Act 1967
Real Property Gains Tax Act 1976
Income tax Act 1967
Promotion of Investments Act 1986
Labuan Offshore Business Activity Tax 1990
Stamp Act 1949
LHDN is to perform as a government agent. They are obligated to perform tax-related services which includes administration, assessment, enforcement, and collection with regard to the payment of taxes.
The LHDN is the official representative of the Malaysian government with regard to any matter regarding taxation; such is the case whether LHDN or government authorities happen to be inside or outside Malaysia.
The LHDN is also required to serve as an advisory body to the government with regard to any matters which are related to taxation.
The LHDN is to liaise with certain ministries and statutory bodies as well as perform any other functions which are required of it by any other written law.
It is also required to act as a collection agent for and on behalf of any entity involved with the recovery of any loans which must be repaid.
Role of a Tax Agent
A tax agent is the go-to person for useful tax related advices, up-to-date tax requirements, in-depth understanding on all tax deductions that you are entitled to claim, tax compliance requirements and actions and above all, tax planning.
As a tax agent, our team at Paul Hype Page & Co. will provide you the necessary information and assistance on policy updates, compliance regulations, changes to tax conditions, and corporate tax in Malaysia. We will also help to upkeep your important company files, tax reports, and tax records.