Malaysia Corporate Tax

Key Note

Corporate Tax in Malaysia
What Are the Important Steps to File Corporate Tax?
What is Corporate Income Tax in Malaysia?
What is the Corporate Tax Rate in Malaysia?
Malaysia Tax Incentives for Businesses
When Do I Pay Corporate Tax in Malaysia?
Paul Hype Page as Your Trusted Tax Agent in Malaysia
Your Questions, Answered
Malaysia Corporate Tax Articles
Our Malaysia Corporate Tax Services

Every company registered in Malaysia is required to file their corporate tax according to the country’s regulations. Engage our Malaysia corporate tax filing services to get strategic tax planning to maximise overall gains.

Corporate Tax in Malaysia

Malaysia corporate tax rate as low as 24%, attracting entrepreneurs all around the world to set up a company in the country.

Here is a checklist of documents required to file your corporate tax in Malaysia.

Company profile
Section 14 form
Passport of directors
Financial statement OR management account
Bank statement
Tax computation
Form C

Download the full Malaysia company incorporation checklist now.

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Check Your Tax Payable

Enter your chargeable income to generate the net tax payable for local SMEs and non-local company or branch.

Assume Chargeable Income

What Are the Important Steps to File Corporate Tax?

When it comes to filing corporate tax in Malaysia, companies have specific responsibilities to fulfill. Here is a breakdown of the procedure that corporate businesses must follow:

Step 1: Filing Estimated Tax Payable

Companies can file their estimated tax payable through e-Filing (e-CP204) or by submitting it to the LHDNM Processing Centre.

For new companies, the estimated tax must be filed within three months after commencing operations.

Existing companies should file the estimated tax payable 30 days before the start of a new year.

Step 2: Payment of Estimated Tax

Corporate companies are required to pay the estimated tax through CP207 on or before the 10th of each month.

New companies commence paying this tax from the 6th month of the basis period.

Existing companies start paying this tax from the 2nd month of the basis period.

Step 3: Furnishing Form C

After the estimated tax payment, companies need to furnish Form C.

Which can be done through e-Filing (e-C) or the LHDNM Processing Centre.

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What is Corporate Income Tax in Malaysia?

Corporate income tax in Malaysia refers to the tax imposed on the profits earned by companies operating within the country. It is an essential aspect of the Malaysian tax system and is regulated by the Inland Revenue Board of Malaysia (IRBM).

The corporate income tax rate in Malaysia is determined based on the company’s residency status and the amount of income generated. Resident companies, which are companies incorporated in Malaysia or have their management and control in Malaysia, are subject to a progressive tax rate ranging from 17% to 24% on their chargeable income.

Non-resident companies, on the other hand, are taxed at a flat rate of 24% on their Malaysian-sourced income. This applies to companies that are not incorporated in Malaysia and do not have their management and control within the country.

It is important for companies to comply with the tax regulations and fulfill their tax obligations in Malaysia. This includes maintaining proper accounting records, submitting annual tax returns, and paying the required taxes within the stipulated deadlines.

To encourage investment and economic growth, the Malaysian government offers various incentives and tax exemptions to eligible companies. These incentives include pioneer status, investment tax allowances, and tax exemptions for specific industries or activities. Companies that qualify for these incentives can enjoy reduced tax rates or exemptions for a certain period, which helps to boost their profitability and competitiveness.

Navigating the complexities of corporate income tax in Malaysia can be challenging, especially for foreign companies or those with intricate financial structures. Seeking the assistance of tax professionals or accounting firms experienced in Malaysian tax laws can ensure compliance, optimize tax planning, and minimize tax liabilities.

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:

Resident Companies:

During 2021 and onwards, the corporate tax rate for resident companies is a progressive rate ranging from 17% to 24%.

The tax rates are as follows:

The first RM600,000 of chargeable income is taxed at 17%.
The portion of chargeable income exceeding RM600,000 is taxed at 24%.

Non-Resident Companies:

Non-resident companies, which are companies not incorporated in Malaysia and do not have their management and control in Malaysia, are subject to a flat tax rate of 24% on their Malaysian-sourced income.

Type of Company	Chargeable Income (MYR)	CIT rate for year of assessment (%)
Type of Company	Chargeable Income (MYR)	2022	2023
Resident company (other than company described below)		24	24
Resident company: with paid-up capital of 2.5 million Malaysian ringgit (MYR) or less, and gross income from business of not more than MYR50 million. that does not control, directly or indirectly, another company that has paid-up capital of more than MYR 2.5 million, and is not controlled, directly or indirectly, by another company that has paid-up capital of more than MYR 2.5 million. with no more than 20% of its paid up capital being owned directly or indirectly by a foreign company or non-Malaysian citizen (w.e.f YA 2024).	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. Chargeable income is calculated by deducting allowable expenses and tax incentives from the company’s total income.

Additionally, there are certain industries and activities that may qualify for specific tax incentives or exemptions provided by the Malaysian government. These incentives aim to promote investment and economic growth in targeted sectors. Eligible companies may enjoy reduced tax rates or exemptions for a specified period, subject to meeting the criteria 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:

Resident SMEs:

Small and Medium Enterprises (SMEs) with paid-up share capital below RM 2.5 million at the beginning of the Year of Assessment enjoy a reduced tax rate.

These companies are taxed at a favorable rate of 17% on the first RM 600,000 of taxable income, providing support and encouragement for smaller businesses.

Companies with MSC Status:

Businesses that acquire the prestigious Multimedia Super Corridor (MSC) status are eligible for significant tax exemptions.

MSC status companies can enjoy tax exemptions for up to 5 years, making this incentive highly sought-after, especially in the technology and digital sectors.

Newly established Companies:

New companies incorporated in Malaysia receive a corporate tax exemption during a specific period before commencing their operations.

The duration of the tax exemption may vary, offering a valuable reprieve to newly formed businesses as they establish themselves in the market.

When Do I Pay Corporate Tax in Malaysia?

For recently registered companies in Malaysia, there are specific requirements regarding tax filing and payment. Within the first three months of registration, these companies are required to submit an estimation of the payable tax. Additionally, starting from the 6th month of the assessment year, they must begin making monthly tax installments by the 15th of each month.

At the end of the assessment year, every company must file its tax return through the e-filing portal. If the payable tax amount exceeds the previously estimated amount, the company is responsible for paying the remaining balance. Conversely, if the actual tax amount is lower than the estimated amount, the company may apply for a tax refund.

However, there is a different criterion for Sdn Bhd companies with a paid-up capital of 2.5 million or less. These companies are exempt from submitting the estimated payable tax for the first two assessment years.

It’s important for companies to adhere to these tax filing and payment obligations to ensure compliance with Malaysian tax regulations. Seeking guidance from tax professionals or consulting with accounting firms experienced in Malaysian tax laws can provide further assistance and ensure accurate compliance with these requirements.

Paul Hype Page as Your Trusted Tax Agent in Malaysia

As your trusted tax agent in Malaysia, we will assist you in dissecting the complex tax structure and finding a solution that works best for your company’s interests. Here are some of the benefits of engaging us as your tax agent:

Provide useful tax-related advice, guidance on the scope of tax and expenses that are available for tax deduction, specific deductions, and double deductions.
Assist in tax compliance and planning to keep you up to date with the latest regulations and interpret any changes.
Reduce complexities by leaving the work to us to compute your tax based on the tax system in Malaysia.
Maximise your opportunity to benefit from tax allowances and tax incentives.
Avoid trouble with tax planning and reduce chances of heavy penalties for issues such as tax mistakes and timeliness.

When should you consider using a tax agent?

Here are some situations where it will be advantageous to engage a tax agent like Paul Hype Page.

Erroneous Past Tax Returns

If you have made errors in your past tax returns, it is important to seek professional advice. A tax agent can assist you in filing an amended return, minimizing any damage caused, and guiding you on the next best steps to take.

New Business Start-up

Hiring a tax agent for your business can be a wise investment in the long run. It saves you time and hassle, allowing you to focus on your business while leaving the tax matters to the professionals who are knowledgeable in tax regulations and requirements.

Inheritance

Malaysia does not have any form of death tax, estate duty, or inheritance tax. However, when inheriting an amount of money or assets, it is advisable to consult with a tax professional before filing your tax returns. They can guide you in understanding the tax implications and ensure that the necessary tax returns are properly filed for the deceased person’s estate.

Change in Marital Status

Whether you have recently married or divorced, a tax professional can provide advice on the best way to handle your taxes. For divorced couples, filing separately is generally recommended to avoid being liable for each other’s unpaid taxes. A tax agent can also assist in ensuring proper handling of alimony payments, if applicable.

Time Constraint

Filing tax returns can be time-consuming and frustrating, especially when your tax situation is complex. Engaging a tax agent can expedite the process, as they are experienced in accurately handling tax matters. This allows you to save time and make better use of it, and they can also help identify any potential tax incentives that you may be eligible for.

Lack of Knowledge

If you have limited knowledge about taxation in Malaysia, it is easy to make mistakes that could lead to high penalties. Tax agents are well-versed in tax laws and regulations, and they can help you navigate sales tax rules and avoid common mistakes such as unintentional tax evasion or tax crimes. Their expertise ensures compliance with tax regulations and minimizes the risk of penalties.

Your Questions, Answered

Based on our experiences with clients, here are the top questions that are frequently asked.

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How is SST different from corporate tax?Timothy2023-07-31T17:18:12+08:00

How is SST different from corporate tax?

SST is a transaction-based tax on goods and services, while corporate tax is imposed on a company’s income. SST is paid by businesses when they sell goods or provide services, while corporate tax is based on the company’s taxable income.

When are the tax return deadlines in Malaysia?Timothy2023-07-31T17:17:08+08:00

When are the tax return deadlines in Malaysia?

The deadline for filing corporate tax returns in Malaysia is usually on or before 7 months after the end of the company’s financial year. However, it is important to note that the deadline may vary based on specific circumstances, so it is advisable to consult with tax professionals or refer to the latest guidelines from the Inland Revenue Board of Malaysia (LHDNM).

Can companies in Malaysia claim tax deductions and incentives?Timothy2023-07-31T17:16:09+08:00

Can companies in Malaysia claim tax deductions and incentives?

Yes, companies in Malaysia are eligible to claim various tax deductions and incentives to reduce their taxable income. These include deductions for business expenses, capital allowances, reinvestment allowances, and specific incentives provided by the government for certain industries or activities.

What are the consequences of non-compliance with corporate tax regulations in Malaysia?Timothy2023-07-31T17:15:27+08:00

What are the consequences of non-compliance with corporate tax regulations in Malaysia?

Non-compliance with corporate tax regulations in Malaysia can result in penalties, fines, and other legal consequences. It is essential for companies to fulfill their tax obligations, including timely filing of tax returns, accurate reporting of income, and payment of taxes to avoid any potential issues.

Are there any specific tax reporting requirements for multinational companies operating in Malaysia?Timothy2023-07-31T17:14:01+08:00

Are there any specific tax reporting requirements for multinational companies operating in Malaysia?

Multinational companies operating in Malaysia may have additional tax reporting obligations, such as transfer pricing documentation and Country-by-Country Reporting (CbCR) requirements. These obligations ensure proper reporting of intercompany transactions and alignment with international tax standards.

Can companies request for tax incentives or negotiate tax arrangements with the tax authorities in Malaysia?Timothy2023-07-31T17:12:47+08:00

Can companies request for tax incentives or negotiate tax arrangements with the tax authorities in Malaysia?

In certain cases, companies may have the opportunity to apply for specific tax incentives or negotiate tax arrangements with the tax authorities. This usually requires a detailed proposal and compliance with the relevant regulations and criteria. Seeking professional advice and guidance is recommended in such situations.

How can companies ensure compliance with changing tax regulations in Malaysia?Timothy2023-07-31T17:11:54+08:00

How can companies ensure compliance with changing tax regulations in Malaysia?

Companies should stay updated with the latest tax regulations, announcements, and guidelines issued by the tax authorities in Malaysia. Regular monitoring of changes and seeking professional advice from tax experts can help ensure compliance and minimize any potential risks or issues.

Is it advisable for companies to seek professional tax advice when dealing with complex tax matters in Malaysia?Timothy2023-07-31T17:09:30+08:00

Is it advisable for companies to seek professional tax advice when dealing with complex tax matters in Malaysia?

Yes, especially for complex tax matters or specific industry-related tax issues, it is highly recommended for companies to seek professional tax advice. Experienced tax professionals can provide comprehensive guidance, ensure compliance, and help companies optimize their tax positions within the legal framework of Malaysia.

What is SST?Timothy2022-07-07T11:45:36+08:00

What is SST?

Sales and Service Tax (SST) compromises of two taxes – sales tax and service tax. The sales tax is imposed by a registered seller on all goods unless exempted by the Minister of Finance. The standard rates are 5% or 10% depending on class of goods.

Service tax is levied at 6%.

Are capital gains taxed in Malaysia?Timothy2022-07-07T11:45:16+08:00

Are capital gains taxed in Malaysia?

Capital gains are not taxed in Malaysia, other than gains which will be taxed under the real property gains tax.

What is the taxable period in Malaysia?Timothy2022-07-07T11:45:04+08:00

What is the taxable period in Malaysia?

The Malaysian tax year is the calendar year – 1 January to 31 December.

How does Malaysia corporate tax rate compare against other countries?Timothy2022-07-07T11:44:43+08:00

How does Malaysia corporate tax rate compare against other countries?

Most countries have a higher corporate tax rate than that of Malaysia. For example, in China, India, and Pakistan, the corporate tax rate is at 25%, 34.61%, and 31% respectively, as compared to 24% in Malaysia.

How does tax administration in Malaysia work?Timothy2022-07-07T11:44:21+08:00

How does tax administration in Malaysia work?

Tax administration in Malaysia is based on the concepts of  paying, self-assessing, and filing. Monthly salary deductions are made for individuals with an employment income; they may also be made through installments for individuals with a business income. 

Taxpayers are to compute their own taxes and submit the ITRF to the IRB. The ITRF is to be accompanied by the payment for the balance of the income tax to be paid so as to meet any shortfall in the monthly payments or a claim for repayment if there is an overpayment.