Malaysia Income Tax

Update Date:2015-9-14 17:35:04 Source:Tannet (Malaysia) Sdn Bhd Views:1004

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Corporate Income Tax

A company, whether resident or not, is assessable on income accrued in or derived from Malaysia. The current corporate income tax rate (for assessment year 2008) is 26%. The rate will be further reduced to 25% for assessment year 2009. A company carrying on petroleum upstream operations is subject to a Petroleum Income Tax of 38%. Currently, corporate tax is based on the imputation system. With effect from assessment year 2008, the current imputation tax system will be replaced, over a transition period of 6 year, with a single-tier tax system. Under the single-tier system, profits are taxed only at the company’s level and dividends received are exempted from tax.

Malaysia Taxation Service

Personal Income Tax

Whether an individual is a “resident” in Malaysia under the Malaysian Income Tax Act 1967 is determined by the duration of his stay in the country. Generally, an individual residing in Malaysia for 182 days or more in a year has resident status. A resident individual is taxed on his chargeable income at a graduated rate from 0% to 28% after deducting relevant tax relief. There are also available tax rebates. A non-resident individual is liable to tax (on income earned in Malaysia) at the rate of 28% without any personal relief.

Withholding Tax

Withholding tax is imposed on certain payments made by residents to non-residents such as interest, royalty, technical fees and rentals for moveable properties. The resident has the obligation to withhold tax when making the payments and to pay the amount within a certain time, failing which the resident is liable to pay a penalty equal to 10% of the unpaid tax and the total sum shall be a debt due to the Government. Due to double tax agreements, residents in some countries may enjoy exemption or reduced withholding tax rates.

Goods And Services Tax (GST)

Malaysia GST is Malaysia Goods and Services Tax (GST), it was implemented since 1 April 2015. It has the purpose of replacing the sales and services tax which has been levied for several years in the country. The 6% GST now replaces the sales-and-service tax which was between 5-10%.

Malaysia GST (Goods and Services Tax) is charged on the taxable supply of goods and services produced in the course of business in Malaysia by a taxable person. In addition, GST is also levied on the importation of goods and services. It is important to note that GST can be charged only if the business is registered under Malaysia Goods and Services Tax (GST).

Malaysia GST (Goods and Services Tax) is considered to be a multi-stage consumption tax on goods and services. This means that GST is charged on the supply of goods and services at each stage of supply chain from the supplier up to the retail stage of the distribution. Although GST is imposed at each level of supply chain, it does not turn into the part of the product’s cost since GST paid on the business inputs is claimable.

Other Taxes

• Import duty is imposed at ad valorem generally.

• Excise duties are levied on selected products manufactured in Malaysia.

• Stamp duty is imposed on various written legal documents that are executed in Malaysia. For documents executed outside Malaysia, stamp duty is applicable if the document purports to effect a transfer of subject matter in Malaysia.

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