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Malaysia Corporate Income Tax Rate

Malaysia adopts a territorial system of income taxation. A company, whether resident or not, is assessable on income accrued in or derived from Malaysia. Income derived from sources outside Malaysia and remitted by a resident company is exempted from tax, except in the case of the banking and insurance business, and sea and air transport undertakings.

 

YA 2017 to YA 2018

  • Resident company with paid up capital of RM2.5 million and below at the beginning of the basis period (SME)(Note 1)

 

On first RM500,000 chargeable income – 18%

On subsequent chargeable income – 20 to 24% *

  • Resident company with paid up capital above RM2.5 million at the beginning of the basis period – 20 to 24%*
  • Non-resident company/ branch – 24%

 

* Reduction in the income tax rate based on the percentage of increase in chargeable income as compared to the immediate preceding Y/A.

Percentage of increase in chargeable income as compared to the immediate preceding year of assessment Percentage point reduction Income tax rate after reduction (%)
Less than 5.00 NIL 24
5.00 to 9.99 1 23
10.00 to 14.99 2 22
15.00 to 19.99 3 21
21 20.00 and above 4 20

 

Note 1:

A SME is defined as a company resident in Malaysia which has a paid up capital of ordinary shares of RM2.5 million or less at the beginning of the basis period of a YA provided:

  • not more than fifty per cent of the paid up capital in respect of ordinary shares of the company is directly or indirectly owned by a related company;
  • not more than fifty per cent of the paid up capital in respect of ordinary shares of the related company is directly or indirectly owned by the first mentioned company; or
  • not more than fifty per cent of the paid up capital in respect of ordinary shares of the first mentioned company and the related company is directly or indirectly owned by another company.

A “related company” in this context means a company which has a paid up capital in respect of ordinary shares of more than RM2.5 million at the beginning of the basis period for a YA.