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Malaysia Corporate Income Tax Rate

Malaysia Corporate Income Tax RateMalaysia adopts a territorial system of income taxation. A company or corporate, 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. Effective from YA 2022, foreign-sourced income of Malaysian residents (companies and individuals) which is received in Malaysia may be subject to tax. Please refer to Malaysian Taxation of Foreign-Sourced Income for more information.

 

YA 2022

  • Resident company with paid-up capital of RM2.5 million and below at the beginning of the basis period (SME) (Note 1); and
  • Company having gross business income from one or more sources for the relevant year of assessment of not more than RM50 million

On first RM600,000 chargeable income – 17%
On subsequent chargeable income – 24%

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

For YA 2022 only, Cukai Makmur is applicable on chargeable income exceeding RM100 million – 33%

 

YA 2023

  • Resident company with paid-up capital of RM2.5 million and below at the beginning of the basis period (SME) (Note 1); and
  • Company having gross business income from one or more sources for the relevant year of assessment of not more than RM50 million

On first RM150,000 chargeable income – 15%
On subsequent RM150,001 to RM600,000 chargeable income – 17%
On subsequent chargeable income – 24%

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

 

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.
  • And with gross business income of not more than RM50 milion.

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.

Effective from YA 2024, to qualify for the SME reduced tax rate, an additional condition is imposed in which not more than 20% of the paid-up capital in respect of ordinary shares / total contribution of capital at the beginning of the basis period for a YA is directly or indirectly owned/contributed by a company or companies incorporated outside Malaysia or an individual or individuals who are not Malaysian citizen.

 

Income Tax Rebate for New SMEs

New SMEs (companies and LLPs) which commenced its business operation within the period from 1 July 2020 to 31 December 2022 is eligible for a tax rebate of RM20,000 per year for 3 YAs if the SMEs meet the conditions announced by the government.

Conditions

  1. The company/LLP must be incorporated or registered in Malaysia and is a tax resident for tax purposes;
  2. The company/LLP must have a paid-up capital of ordinary shares/capital contribution not exceeding RM2.5 million at the beginning of the basis period for the year of assessment the tax rebate claim is made;
  3. The gross business income from all sources does not exceed RM50 million in the year of assessment the tax rebate claim is made; and
  4. The employee of the company/LLP shall be different from its related company (except the CEO and director); New companies/LLPs incorporated shall commence operations on or after 1 July 2020 but not later than 31 December 2022. 
    1. Shall not own or be owned directly or indirectly by related company/LLP which has paid-up capital/capital contribution of more than RM2.5 million at the beginning of the basis period;
    2. The Company’s / LLP’s operation shall be carried out in a different premises from its related company/LLP;
    3. The Company/LLP shall not use the plant, equipment and facility owned or disposed by its related company/LLP;
    4. The employee of the Company/LLP shall be different from its related company (except the CEO and director);
    5. Out by the Company/LLP shall be different from its related company/LLP;
    6. The Company/LLP shall not be a result of a merger or acquisition of 2 or more companies/LLPs which qualifies for the SME status; and
    7. The Company/LLP is not a partnership or company which has been converted into a limited liability partnership.

Failure of the company/LLP to comply the conditions set for a YA will disqualify the company/LLP from claiming tax rebate for that YA and subsequent YA.

If the amount of tax rebate exceeds the amount of tax charged, the excess will be disregarded. This means that the excess rebate will not be refunded or used as a credit to be deducted from the company/LLP’s tax liability for subsequent YAs.