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Malaysia Personal Income Tax Rate

A graduated scale of rates of tax is applied to chargeable income of resident individual taxpayers, starting from 0% (on the first RM5,000) to a maximum of 28% on chargeable income exceeding RM1,000,000 with effect from YA 2016.

Non-resident individuals pay tax at a flat rate of 28% with effect from YA 2016. Other rates are applicable to special classes of income, eg interest or royalties.

 

Tax rate for resident

Chargeable Income Income Tax Rate (%) Gross Tax Payable (RM)
On RM5,000 
Next RM5,000

1

50
On RM10,000 
Next RM10,000
– 
1
50 
100
On RM20,000 
Next RM15,000
– 
5
150 
750
On RM35,000 
Next RM15,000
– 
10
900 
1,500
On RM50,000 
Next RM20,000
– 
16
2,400 
3,200
On RM70,000 
Next RM30,000
– 
21
5,600 
6,300
On RM100,000 
Next RM50,000
– 
24
11,900 
12,000
On RM150,000 
Next RM100,000
– 
24
23,900 
24,000
On RM250,000 
Next RM150,000
– 
24.5
47,900 
36,750
On RM400,000 
Next RM200,000
– 
25
84,650 
50,000
On RM600,000 
Next RM400,000
– 
26
134,650 
104,000
On RM1,000,000 
Exceeding RM1,000,000
– 
28
238,650 

 

 

INCOME TAX RATES — KNOWLEDGE WORKERS IN ISKANDAR MALAYSIA

With effect from Y/A 2010, the employment income of an individual who is a knowledge worker residing in Iskandar Malaysia and is employed with a person who is carrying on a qualified activity would be taxed at 15% of his/her chargeable income. The Malaysian Inland Revenue Board has clarified that qualifying individuals can opt to be taxed at 15% by indicating an option in the return form. Otherwise, the individuals will be taxed at scale rates.

The PU Orders on Income Tax (Determination of Knowledge Worker, Qualified Activity and Specified Region) Rules 2010 was issued on 29 September 2010.

The above Rules apply to a qualified person who has been granted approval by the Minister of Finance on his application made on or after 24 October 2009 but not later than 31 December 2015. With the approval, his employment income from 1 January 2010 from the designated company would be subject to tax at the concessionary rate of 15%.

 

The Order provides definitions for the following terms:

(i) Qualified person

(ii) Designated company

(iii) Knowledge worker, qualified activities and specified region

 

Specified regions within the Iskandar Development Region are:

(i) Nusajaya

(ii) Western Gate Development

(iii) Johor Bahru Central Business District

(iv) Eastern Gate Development (v) Skudai – Senai

 

INCOME TAX RATES — RETURNING EXPERT PROGRAMME

In order to encourage skilled Malaysian professionals to return and boost the country’s economic growth, the employment income of an approved individual under the Returning Expert Programme (REP) will be taxed at the flat rate of 15% for a period of 5 years. This is with effect from Y/A 2012.

A gazette order has been issued on 24 May 2012, Income Tax (Determination of Approved Individual and Specified Year of Assessment Under the Returning Expert Programme) Rules 2012 [P.U.(A)151], to provide for the ascertainment of chargeable income of specified individuals that is subject to tax under the Income Tax Act.

Specified individuals means those:

(a) whose application under the Returning Expert Programme has been approved by the Minister of Finance;

(b) whose income is received from an employment with any person resident in Malaysia; and

(c) whose employment commences on or after 1 May 2011.

Further terms and conditions on REP can also be found in the Talent Corporation Malaysia Berhad’s website at www.talentcorp.com.my.

Dealing with tax is not an easy thing without the expert’s advice and assistance. Feel free to contact us if you are unsure of how to file your personal income tax.