In Malaysia, every registered company is legally required to comply with the Income Tax Act 1967 by filing accurate corporate tax returns. This includes meeting statutory deadlines, maintaining proper financial documentation, and ensuring precise reporting to the Inland Revenue Board of Malaysia (LHDN).
Staying compliant not only helps businesses avoid costly penalties and maintain good standing with Malaysian tax authorities—it also plays a crucial role in national economic stability. More importantly, proper tax management supports strategic financial planning, improves cash flow visibility, and lays the foundation for long-term business sustainability in Malaysia’s competitive market.
Corporate Tax in Malaysia
Corporate tax in Malaysia plays a central role in shaping the country’s economic landscape and business accountability. Administered by the Inland Revenue Board of Malaysia (LHDN), the system operates under the Income Tax Act 1967, requiring all companies—local and foreign—to file timely, accurate tax returns and maintain proper financial documentation.
Malaysia’s tax framework encourages compliance while supporting enterprise growth through tax incentives and exemptions, especially in priority sectors like manufacturing, digital economy, and green technology. To thrive in Malaysia’s business environment, companies must not only avoid penalties but also adopt strategic tax planning to maximize deductions and optimize corporate tax efficiency. A proactive approach to corporate tax ensures both legal compliance and long-term sustainability in Malaysia’s competitive market.
Related Read: Requirements of a Company Secretary in Malaysia 2025
Documents Required to File Corporate Tax in Malaysia
Malaysia’s corporate tax rate of 24% and its strong business ecosystem make it an attractive destination for both local and foreign companies. To remain compliant with the Inland Revenue Board of Malaysia (LHDN), companies must prepare the following key documents:
Proper submission ensures compliance with Malaysian corporate tax regulations under the Income Tax Act 1967 and avoids unnecessary penalties.
What is Corporate Income Tax in Malaysia?
Corporate income tax in Malaysia is imposed on profits earned by companies operating in the country and is governed by the Income Tax Act 1967, enforced by the Inland Revenue Board of Malaysia (LHDN). All resident and non-resident companies with Malaysian-sourced income are required to comply with local tax laws.
For resident companies, the standard corporate tax rate is 24%, while Small and Medium Enterprises (SMEs) enjoy a reduced rate on the first RM600,000 of chargeable income. Non-resident companies are also taxed at 24% on income derived from Malaysian operations. Businesses must calculate chargeable income accurately, considering allowable deductions and exemptions under Malaysia’s tax regulations.
Malaysia’s corporate tax framework is designed to attract foreign investors through incentives such as tax holidays, investment allowances, and sector-specific exemptions in industries like technology, green energy, manufacturing, and biotechnology. Accurate filing, timely documentation, and alignment with financial reporting standards are essential to avoid penalties and maintain a good relationship with tax authorities.
Complying with Malaysia’s corporate tax system not only fulfills regulatory obligations but also enables strategic financial planning and sustainable business growth. For foreign investors and local entrepreneurs alike, understanding corporate income tax is key to optimizing tax efficiency and contributing meaningfully to the Malaysian economy.
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How Is Corporate Tax Rate Determined?
In Malaysia, corporate tax rates are primarily determined by a company’s residency status and its chargeable income. Resident companies—those incorporated or effectively managed and controlled in Malaysia—are subject to a progressive tax system. For Small and Medium Enterprises (SMEs) with annual chargeable income of up to RM600,000, a reduced tax rate of 17% applies. Any income exceeding that threshold is taxed at the standard rate of 24%.
Non-resident companies, on the other hand, are subject to a flat 24% tax rate on income sourced from Malaysia. These are companies not incorporated, managed, or controlled within Malaysian borders but that still generate income from local operations.
To ensure compliance, companies must maintain proper accounting records, submit annual tax returns, and pay the due taxes within the prescribed deadlines under the Income Tax Act 1967. Failure to comply can result in penalties, audits, or reputational harm.
The Malaysian government supports business growth and foreign direct investment through strategic tax incentives. These include pioneer status, investment tax allowances, and sector-specific exemptions in industries like tech, renewable energy, and manufacturing. These incentives can significantly reduce tax burdens and enhance competitiveness in Malaysia’s vibrant economy.
Given the intricacies of Malaysia’s corporate tax landscape, especially for multinational companies or complex structures, businesses are encouraged to seek guidance from local tax experts or licensed accounting firms in Malaysia. Professional advisory ensures full compliance while optimizing tax planning and minimizing unnecessary liabilities.
What Are the Important Steps to File Corporate Tax?
Filing corporate tax in Malaysia is a mandatory requirement for all companies operating in the country. Regulated by the Inland Revenue Board of Malaysia (LHDN) under the Income Tax Act 1967, the process involves several critical steps to ensure tax compliance and avoid penalties.
Step 1: Filing Estimated Tax Payable
All companies in Malaysia must declare their estimated tax payable using Form CP204. This can be submitted online via the e-Filing system or manually at the LHDNM Processing Centre.
For newly incorporated companies, this estimate must be submitted within 3 months of the start of business operations. For existing companies, the submission must be made 30 days before the beginning of the new financial year. Filing your tax estimate on time sets the foundation for a compliant tax record and supports financial planning throughout the year.
Step 2: Payment of Estimated Tax
Companies are required to pay their estimated tax in monthly installments using Form CP207. Payments must be made on or before the 10th of each month.
New companies begin payments from the 6th month of the financial year, providing a brief ramp-up period to manage cash flow. Established companies, however, must begin payment from the 2nd month of their financial year. Consistent monthly payments help avoid large end-of-year tax burdens and ensure continuous compliance with Malaysia’s tax regulations.
Step 3: Furnishing Form C
After making the necessary estimated payments, companies must submit Form C, the official annual tax return. This document details the company’s total income, allowable deductions, and chargeable income for the financial year.
Companies can submit Form C electronically via LHDN’s e-C portal, or manually at designated LHDN offices. Regardless of the submission method, businesses must ensure accuracy and timeliness, as late filing or errors may lead to penalties or audit risks.
By following these three key steps—CP204 submission, CP207 payments, and Form C filing—companies in Malaysia can maintain full compliance with corporate tax regulations. For smoother processing and peace of mind, many businesses choose to engage with a licensed tax advisory firm in Malaysia to manage their obligations and optimize their tax strategy.
What is the Corporate Tax Rate in Malaysia?
The corporate tax rate in Malaysia depends on the company’s residency status and the amount of income generated. Here is an overview of the current corporate tax rates in Malaysia:
| Type of Company | Chargeable Income (MYR) | CIT rate for year of assessment (%) | |
|---|---|---|---|
| 2024 | 2025 | ||
| Resident company (other than company described below) | 24 | 24 | |
Resident company:
|
On the first 150,000 | 17 | 15 |
| On the next 450,000 | 17 | 17 | |
| In excess of 600,000 | 24 | 24 | |
| Non-resident company | 24 | 24 | |
It’s important to note that these tax rates are applicable to the chargeable income of the companies. Companies calculate their chargeable income by deducting allowable expenses and tax incentives from their total income.
Additionally, certain industries and activities qualify for tax incentives or exemptions. These tax incentives/exemptions are specific and dependent on the industry, and are provided by the Malaysian government. These incentives aim to promote investment and economic growth in targeted sectors. Thus, eligible companies may be able to enjoy reduced tax rates or exemptions for a specified period of time. With these benefits being subject to meeting the criteria’s set by the relevant authorities.
Malaysia Tax Incentives for Businesses
To encourage more investors and businesses to set up in Malaysia, the government has initiated a range of tax incentives. Here are some key tax incentives:
When Do I Pay Corporate Tax in Malaysia?
In Malaysia, corporate tax payments follow a structured timeline governed by the Income Tax Act 1967 and overseen by the Inland Revenue Board of Malaysia (LHDN). For newly registered companies, the estimated tax payable must be declared within three months of incorporation. Monthly tax installments begin from the sixth month of the basis period and are due on the 15th of each month.
At the end of the financial year, every company must submit its Form C corporate tax return via the e-filing portal. If the final tax payable is higher than the estimated amount, the company must pay the balance. If the final amount is lower, the business may request a tax refund through LHDN.
For Sdn Bhd companies with a paid-up capital of RM2.5 million or less, there is an exemption from filing estimated tax payable (CP204) during the first two assessment years. This exemption provides relief for small businesses and start-ups during their early growth stages.
To ensure full compliance and avoid penalties, Malaysian companies are encouraged to seek professional tax advisory services. Engaging a reliable tax agent or accounting firm in Malaysia helps businesses navigate their corporate tax obligations efficiently and accurately.
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