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Company Income Tax in Malaysia

Corporate tax, or company tax, is a levy placed on the profits/revenues of a company and it varies between countries. Just as personal income taxes can influence the spending behaviour of individuals, corporate taxes will affect the way that corporations do business.

Malaysia Corporate Income Tax Guide

Revenues from the Corporate Tax Rate are an important source of income for the government of Malaysia. Malaysia adopts the unitary tax system on a territorial basis. Tax residents of Malaysia, both corporate and individuals, are levied on profits/incomes earned in or generated from Malaysia or foreign-sourced income remitted to Malaysia (except resident companies that include banking, insurance, sea or air transport operations as well as resident individuals). Companies in Malaysia are subject to corporate income tax, real property gains tax and goods and service tax (GST).

This page provides you with an overview of

  1. Tax residency
  2. Tax rate
  3. Single Tier System
  4. Tax Deductions
  5. Tax Incentives

 

Malaysia Corporate Income Tax Rate

As the name suggests, the Corporate Income Tax Rate is a levy collected from companies. Its amount is based on the net profit companies earn while exercising their business activity, normally during one business year. The benchmark refers to the highest rate for Corporate Income. The corporate tax rate for resident and non-resident corporations (that include branches of foreign companies) stands at 20-24%. Corporate Tax Rate in Malaysia averaged 26.41 % from 1997 until 2018. In an effort to help business entities to be more competitive in the market, the Malaysian government has rolled out a reduction of corporate tax rate for SMEs from 19% to 18% on the chargeable income up to RM500, 000 for YA 2017. You can find out the detailed description of Malaysia Corporate Income Tax Rate from our website.

 

Estimate of Tax Payable in Malaysia

In Malaysia, a company can revise the tax estimate on the 6th and 9th month of the basis period using CP204A Form. However, it is not an easy task to calculate tax estimate. As such, the question: How to calculate tax estimate for CP204? has become one of the most commonly asked questions in filling up the Form CP204.

In simpler words, a company must make several assumptions and projections based on the current year’s management results to calculate the possible tax payable for the coming year. The calculation is important as it can help to predict what will happen based on what is having now. Therefore, keeping an up-to-date management accounts has become the important factor in getting more accurate prediction and calculation.

 

Corporate Tax Planning in Malaysia

As opposed to tax compliance or reporting, which reflects back on events that have already happened, “corporate tax planning” is forward-looking activity and it is part of the strategic structuring of business operations in order to minimize tax liabilities. Generally, corporate tax planning activities seek to avoid legally triggering tax costs rather than illegally evading an existing obligation to pay taxes. You can read on to find out what your tax position is and what will affect your tax considerations.