Malaysia Tax – A Snapshot

Type of taxes	Tax rate and requirements
(1) Corporate tax	(a) Tax Rate : Standard: 24% (2016 onwards) 25% (2015) SME: 19%(2015: 20%) for first RM500k taxable income; 24%(2015: 25%) for income exceeding RM500k Company (resident and incorporated in Malaysia) with paid up capital of RM2.5 million or less at beginning of the year (b) Scope of taxation : Territorial (foreign sourced income are exempted) All business/trading and passive income are subject to tax. Capital gain is not subject to corporate tax (c) Dividend system : Single tier system – no tax deduction upon payment and exempt in the hand of shareholders (d) Tax losses : Business loss can be utilised against business income for future years. Group relief scheme is available. Group Relief enables companies to deduct unutilised current year losses of one company from the assessable income of another company in the same group (subject to certain conditions) (e) Tax filing : Within 7 months from financial year end (f) Tax payment : All companies (unless exempted) need to submit tax estimate at least 1 month before commencement of financial year and make monthly tax payment based on the estimate submitted. Final balance of tax payable (if any) need to be paid within 7 months from financial year end.
(2) Withholding tax on payment to non-residents	Interest: 15% Royalties: 10% Technical fees: 10% Rental of moveable property: 10% Other income/gains: 10% Dividend : Nil Director fee: N/A (No WHT but may be subject to monthly tax deduction by employer) [Reduced rate may be available under the Double Tax Agreement]
(3) Capital gains tax / property gains tax	No capital gains tax in Malaysia except that real property gains tax (RPGT) is imposed on disposal of property and shares in real property company(RPC) RPGT Rates (depends on holding period of property) Individual citizen/Permanent Resident : 30% ( disposal within 3 years ) 20% ( disposal in year 4 ) 15% ( disposal in year 5 ) 0% ( disposal after year 5) Corporate & Others(non-citizen etc) : 30% ( disposal within 3 years ) 20% ( disposal in year 4 ) 15% ( disposal in year 5 ) 5% ( disposal after year 5)
(4) Individual tax	a) Tax Rate : Tax resident: Progressive tax rate from 0% to 28% (2016 onwards) Top tax bracket: 28% ( for income exceeding RM1 million ) Progressive tax rate 0% to 25% (2015) Top tax bracket: 25%( for income exceeding RM400,000 ) Non Tax Resident : Flat rate of 28% (2016 onwards) Flat rate of 25% (2015) (b) Tax filing : Tax year is based on calendar year. Personal tax return must be submitted by 30 April of the following calendar year. Individuals with business income need to submit tax return by 30 June. (c) Tax payment : Those with employment income, employer will deduct estimated tax from monthly salary and pay to the tax authority. Individuals with business income may be required to pay tax instalments if notice is received from the tax authority. Final balance of tax payable (if any) need to be paid by the tax return due date. Individuals with only employment income may opt to treat the monthly tax deduction as final tax and tax return need not be furnished.
(5) Goods and Services Tax(GST)	Note : GST was implemented from 1 April 2015 replacing the Sales and Service Tax (a) Registration threshold : Annual turnover exceeding RM500,000 [Exemption: making wholly zero-rated supplies] (b) Tax rate : Standard rate: 6% Zero-rated: 0% a) local supply of certain food items and prescribed goods b) export of all goods c) prescribed international services Exempt from GST: certain prescribed goods and services (c) Filing of GST return and payment of GST due : Monthly (business with annual turnover exceeding RM5million) Quarterly (business with annual turnover of RM5million and below) Due date for submission and payment: within 1 month after the end of the taxable period (monthly or quarterly).

Type of taxes

Tax rate and requirements

(1) Corporate tax

(a) Tax Rate :
Standard: 24% (2016 onwards)
25% (2015)

SME*: 19%(2015: 20%) for first RM500k taxable income; 24%(2015: 25%) for income exceeding RM500k

* Company (resident and incorporated in Malaysia) with paid up capital of RM2.5 million or less at beginning of the year

(b) Scope of taxation :
Territorial (foreign sourced income are exempted)

All business/trading and passive income are subject to tax. Capital gain is not subject to corporate tax

(d) Tax losses :
Business loss can be utilised against business income for future years.

Group relief scheme is available. Group Relief enables companies to deduct unutilised current year losses of one company from the assessable income of another company in the same group (subject to certain conditions)

(e) Tax filing :
Within 7 months from financial year end

(f) Tax payment :
All companies (unless exempted) need to submit tax estimate at least 1 month before commencement of financial year and make monthly tax payment based on the estimate submitted. Final balance of tax payable (if any) need to be paid within 7 months from financial year end.

(2) Withholding tax on payment to non-residents

Interest: 15%

Royalties: 10%

Technical fees: 10%

Rental of moveable property: 10%

Other income/gains: 10%

Dividend : Nil

Director fee: N/A
(No WHT but may be subject to monthly tax deduction by employer)

[Reduced rate may be available under the Double Tax Agreement]

(3) Capital gains tax / property gains tax

No capital gains tax in Malaysia except that real property gains tax (RPGT) is imposed on disposal of property and shares in real property company(RPC)

RPGT Rates (depends on holding period of property)

Individual citizen/Permanent Resident :
30% ( disposal within 3 years )
20% ( disposal in year 4 )
15% ( disposal in year 5 )
0% ( disposal after year 5)

Corporate & Others(non-citizen etc) :
30% ( disposal within 3 years )
20% ( disposal in year 4 )
15% ( disposal in year 5 )
5% ( disposal after year 5)

(4) Individual tax

a) Tax Rate :
Tax resident:

Progressive tax rate from 0% to 28% (2016 onwards)
Top tax bracket: 28% ( for income exceeding RM1 million )

Progressive tax rate 0% to 25% (2015)
Top tax bracket: 25%( for income exceeding RM400,000 )

Non Tax Resident :
Flat rate of 28% (2016 onwards)
Flat rate of 25% (2015)

(b) Tax filing :
Tax year is based on calendar year. Personal tax return must be submitted by 30 April of the following calendar year. Individuals with business income need to submit tax return by 30 June.

(c) Tax payment :
Those with employment income, employer will deduct estimated tax from monthly salary and pay to the tax authority.

Individuals with business income may be required to pay tax instalments if notice is received from the tax authority.

Final balance of tax payable (if any) need to be paid by the tax return due date.

Individuals with only employment income may opt to treat the monthly tax deduction as final tax and tax return need not be furnished.

(5) Goods and Services Tax(GST)

Note : GST was implemented from 1 April 2015 replacing the Sales and Service Tax

(a) Registration threshold :
Annual turnover exceeding RM500,000
[Exemption: making wholly zero-rated supplies]

(b) Tax rate :
Standard rate: 6%

Zero-rated: 0%
a) local supply of certain food items and prescribed goods
b) export of all goods
c) prescribed international services

Exempt from GST: certain prescribed goods and services

(c) Filing of GST return and payment of GST due :
Monthly (business with annual turnover exceeding RM5million)
Quarterly (business with annual turnover of RM5million and below)

Due date for submission and payment: within 1 month after the end of the taxable period (monthly or quarterly).

Malaysia Tax – A Snapshot

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