What Are the Other Tax Duties in Malaysia?
Government entities and regulators impose and enforce a tax regime so they can finance projects and activities aimed to develop and improve the lives of their citizens. These involuntary fees are levied on individuals or corporations and depend on local, regional, or even national.
If we look at the economics principles, the taxes are payable by who has the burden of the tax, whether it is an entity being taxed or the end consumers of a company’s goods for sale. The tax could be from income earned from salary, capital gains from investment returns, cash dividends serving as additional income, payment for goods and services, and more.
Generally, a percentage of the earnings of the taxpayers is being remitted to the government. It is compulsory. Tax evasion, or avoiding paying taxes deliberately, is punishable under the law.
Indeed, you need to know what the tax duties in Malaysia are so as not to appear evading tax liabilities. It is to protect you from potential legal repercussions. Let us discuss these tax duties in Malaysia.
Enumerating the Tax Duties in Malaysia
You already know that there are such things as income tax. But there is more to this. There are other tax duties in Malaysia that you should be familiar with as well. Here they are:
- Sales tax. This is a single-stage tax that is generally an ad valorem tax. It is imposed on taxable goods manufactured by a registered factory in Malaysia and on imported taxable goods by any individual. Take note there are specific rates of sales tax placed on certain classes of petroleum only. These are either 5 per cent or 10 per cent based on the class of goods presented.
- Service tax. The rate for this kind of tax is pegged at 6 per cent. Service tax is a form of consumption tax collected and imposed on any taxable services. Such service is provided by a registered person working for a legitimate business in Malaysia.
- Import duties. These are taxes collected on goods imported to the country which are subject to import duties. These import duties are usually computed on an ad valorem basis, which ranges from 2 per cent to 60 per cent. However, some may have a specific basis for import duties. Take note that raw materials, machinery, essential food ingredients, and pharmaceutical products are usually exempted from import duties or subject to lower tax rates.
- Excise duties. This kind of tax is only placed on a selected range of goods manufactured and imported into the country. These include beer or stout, cider and perry, rice wine, and mead. In addition, brandy, whisky, rum and tafia, gin, motor vehicles, and tobacco cigarettes are also subject to an excise tax. The rate of tax varies from a composite rate of MYR 0.1 per litre and 15 per cent of the value for some types of alcoholic beverages. For motorcars, the excise duty can be as much as 105 per cent of the value, depending on the engine capacity.
- Property tax. It is collected on the gross annual value based on the calculations by the regulators and authorities.
- Real property gains tax. It is a duty charged on the amount you gained upon disposal of real property. This could be any land situated in Malaysia or shares in a real property company.
- Payroll taxes. The monthly tax deduction scheme governs this tax. Simply put, employers must deduct the tax payment from their employees’ salaries per month. These deductions are to be remitted to the tax regulators and authorities monthly as well.
There are other more tax duties in Malaysia, but the mentioned above are the most usual ones. It is important to always check what the regulations are so you can properly adhere to policies.
Avoiding Legal Repercussions
If you are a business owner, you have to understand that your company should be able to comply with all regulations by the authorities. This includes paying the right amount of taxes. If you are not aware of this, you might just find yourself with some major problems.
You might be charged with tax evasion should you fail to pay your tax liabilities or pay them but fall short of the actual amount. Remember that the authorities, despite you failing to submit appropriate tax forms, can determine for themselves if the taxes you paid are the right amount. They can check it based on your documents.
To avoid such complications, educate yourself on the matter and comply always. It might be easy to not pay your liabilities but remember that it would only hurt you in the long run.
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