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Malaysia Taxation System

Like many other jurisdictions, Malaysia has its own taxation system. Malaysia’s taxes are assessed on a current year basis and are under the self-assessment system for all taxpayers. All income accrued in, derived from, or remitted to Malaysia is liable to tax. That said, income of any person (other than a resident company carrying on the business of banking, insurance or sea or air transport) derived [from sources] outside Malaysia and received in Malaysia is exempted from tax. One thing worth mentioning is Malaysia has an extensive number of double tax treaties available for the avoidance of Double Taxation.

Overview of Malaysia Taxation in Malaysia

Overview of Malaysia Taxation

 

Corporate Income Tax

In Malaysia, corporations are subject to corporate income tax, real property gains tax,  goods and services tax (GST) and etc taxes. In other words, resident and non-resident organisations doing business and generating taxable income in Malaysia will be taxed on income accrued in or derived from Malaysia. Resident organisations carrying out business of air/sea transport, banking and insurance are taxable on their global income. Having said that, there are exemptions for resident banks, insurance companies, and Takaful companies [subject to specified conditions]. The tax year (or basis period) for a business usually follows the financial year ending in that particular year of assessment. For example, the basis period for YA 2017 for a business that closes its accounts on 31 December 2017 is the financial year ending 31 December 2017.

Tax filing could be very taxing if you are not familiar with it. You may read on to find more about the foreign-sourced income, corporate income tax rate, tax incentives and taxation for investment property in Malaysia so that you are well-informed of Malaysia’s taxation system. We provide a comprehensive guide and information that includes corporate tax planning as well as the assistance from professional accounting personnel.

 

Individual Income Tax

As the name implies, individual income tax in Malaysia is imposed on earned in Malaysia or received in Malaysia from outside Malaysia. In this light, every individual is subject to tax on income accruing in or derived from Malaysia. That said, income earned overseas (remitted to Malaysia by a resident or individual) is exempted from tax. Income is assessed on a current year basis and individuals must comply with the self-assessment scheme. The tax rate differs as it is calculated according to the chargeable income of resident individual taxpayers.

If you are new to Malaysia’s taxation system, be it the corporate tax or the personal income tax, we are here to help you to understand the taxation system and do the tax filing. Contact Us today to know more about personal income tax filing requirement in malaysia and personal tax reliefs in Malaysia.

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Overview of Malaysia Taxation Resources