Taxation Services in Malaysia

It is mandatory for all employers and employees to fulfil tax obligations in Malaysia, regardless if you are local or foreigners, under the self-assessment system. Personal income tax in Malaysia is progressive, starting from 0% to 30% (maximum tax rate). The double taxation with more than 70 tax treaties worldwide is undoubtedly another reason you can incorporate a business in Malaysia.
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Corporate Tax and Property Tax

All companies must file their Malaysia income tax to the Inland Revenue Board (IRB) every year. The standard corporate tax rate for a local company is 24%. Meanwhile, for companies with a paid-up capital of less than RM2.5 million, the tax rate is 17%. The first RM600,000 is chargeable for the corporate income tax, and other excess income will be charged at a 24% taxation rate, according to the year-of-assessment (YA) 2020.

While for a real property sale acquired within 3 years, a “Real Property Gains Tax” (RPGT) will apply at the rate of 30% for the profits gained.

Withholding Tax (WHT) and Sales and Service Tax (SST)

Withholding tax applies to the non-resident’s company in Malaysia. The tax rate varies from 0% to 15%. Withholding tax is chargeable to interest paid to a non-resident, royalties, technical and non-technical services.

And for an SST, the standard rate of 5% or 10% will be charged for goods manufactured or imported in Malaysia for sales tax. As for other services tax, including but not limited to food and beverages, accommodation, telecommunication, healthcare, and other professional services, is at 6%.

Personal Income Tax

The personal income tax in Malaysia is in a progressive nature, starting from 0% to a maximum of 30%. In other words, all employees are required to pay their tax according to their income.

For individuals who don’t carry a business, they must file their tax latest by 30 April of the following year. For individuals who hold a business or partnership, they must file their tax latest by 30 June of the following year.

SOCSO, EPF and EIS

It is compulsory for both employers and employees to make their contributions to the Social Security Organization (SOCSO), Employment Insurance System (EIS), Employees Provident Fund (EPF).

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