Deloitte Malaysia Tax Highlights
During the International Tax Review (ITR) Asia Tax Awards 2020, Deloitte bagged three awards. There were two nationals and one regional.
In the last four years, Deloitte Malaysia has been recognized as Malaysia Tax Firm of the Year three times. It also received recognition for being the Transfer Pricing Firm of the Year. Their Transfer Pricing Partner is Theresa Goh, who received the award for Asia Transfer Pricing Practice Leader of the Year.
In general, branches get the same taxes as their subsidiaries. The foreign corporation branches in Malaysia are treated as non-residents in general unless it is established that their management and control are in Malaysia. If not, the income tax from payments received from a project rendered in Malaysia may be withheld by the payer at 10%. There is an additional 3% that can be credited against the payable income tax. In general, non-residents are not entitled to receive investment incentive and exemptions.
- Taxable income – Taxable income from Malaysia, including profits or gains from businesses, interest, dividends, premiums, rents, royalties, or earnings from other sources.
- Rate – 24% for the corporate tax rate. Small and medium scale companies are at 17% on the first MYR 50 million for the resident.
- Alternative minimum tax – If the company is carrying a Labuan business activity, the tax is only 3% of the accounting profit that has been audited.
- Dividends taxation – Must follow the Single-Tier System (STS)
- Capital Gains – The capital gains do not get taxed in Malaysia, except if it comes from real property disposal or company shares from the real property.
- Losses – Losses can be carried to the next year of assessment for up to 7 years.
- Foreign tax relief – This can be credited based on the Malaysia tax derived from the same profits of 50% of foreign tax if there is no treaty.
- Participation exemption – There is none, but there is no tax on foreign-sourced income, and domestic dividends are exempted.
- Incentives – There are a lot of incentives available for specific industries like hotels, manufacturing, information technology services, healthcare services, Islamic finance, biotechnology, tourism, venture capital energy conservation, and environmental protection. The incentives have tax holidays of up to 10 years. The investment tax allowances, double deductions, accelerate capital allowances, and reinvestment allowances. They proposed a new incentive which is accelerated allowances and the automation equipment allowances. This is to encourage the industry transformation to 4.0. This involves adopting technology drivers like “big data” autonomous robots, analytics, industrial internet of things, and more. This is done by the sector of manufacturing and the related services.
- Tax year – It is the fiscal year, which is the accounting year in general
- Consolidated returns – There is no permission for consolidation; each company must file a separate tax returnHoweverver. It is subject to specific conditions, 70% of the loss adjusted by a company can be used to offset the related entity profits. The losses can be generally surrendered in general that are only limited to the ones that relate to the first years of assessment that follow the company’s first fiscal year.
- Filing and the payment – The operation of Malaysia is on a self-assessment regime. The advanced corporate tax can be in 12 monthly instalments. The tax return should be filed within seven months after the company year ends.
- Penalties – There are penalties that apply for failing to comply with tax laws.
- Rulings – The taxpayers could request an advance ruling on the tax treatment of a transaction. Authorities issue public rulings.
You can get the Malaysian Taxation Services of 3E Accounting, so your taxes are handled properly, and you will not have a problem paying them on time.