Malaysian Tax
Income remitted to Malaysia by resident companies (other than companies carrying on the business of banking, insurance, air and sea transportation), non-resident companies and non-resident individuals are exempted from tax.
From the year 2000, income tax in Malaysia is assessed on income earned in the current year. The assessment system changed to a self-assessment system in stages starting 2001.Effective from the year of assessment 2004, income remitted to Malaysia by a resident individual is exempted from tax.
Corporate Tax
Resident and non-resident companies :25%
Resident companies with paid-up capital of RM2.5 million (US$754,375) and less at the beginning of the basis period for a year of assessment
- on the first RM500,000 (US$150,875) chargeable income: 20%
- on subsequent chargeable income: 25%
Petroleum Income Tax
Downstream oil & gas company : 25%
Upstream oil & gas operations means searching for, winning or obtaining of petroleum in Malaysia (by drilling, mining, extracting etc), all operations incidental thereto and sale or disposal of petroleum so won or obtained.
Downstream oil & gas operations include transportation , refining ; dealing with products so refined or liquefied; service involving the supply and used of rigs, derricks, ocean tankers and barges.
Income Tax- Others
Trust body : 25%
Executor of deceased individual ( not domiciled in M'sia) : 25%
Receiver appointed by court : 25%
Life Insurer : 8%
Inward reinsurance & Takaful : 5%
Co-operative Society :chargeable income >RM 20,000 p.a. :2%-26%
Deduction allowed against income based on member fund : 8%
Personal Income Tax
Resident individuals with chargeable income of RM16,667(US$5,029) and above per annum (after deduction of personal reliefs): 1% - 26%
Non-resident individuals (not entitled to any personal reliefs): 26%
International Tax
Double Taxation Agreement (DTA) is an agreement between two countries seeking to avoid double taxation by defining the taxing rights of each country with regard to crossborder flows of income and providing for tax credits or exemptions to eliminate double taxation.
Withholding tax rates for countries that signed DTA with Malaysia are specified in the DTA while countries that have not signed DTA with Malaysia, the below withholding tax rates shall apply.
Non-resident persons
•Special classes of income (use of moveable property, technical services, installation services on the supply of plant and machinery, etc.): 10%
•Interest: 15%
•Royalty: 10%
•Foreign public entertainer: 15%
•Contract payment on:
- account of contractor :10%
- account of employee :3%
Other income such as commission, guarantee fees, agency fees, brockerage fees, introducers fees, etc. :10%
Real Property Gain Tax (RPGT)
Disposal of properties, RPC shares and land from 1.1.2012 :
10% : for holding period up to 2 years
5% : for holding period > 2~ 5 years
0% : for holding period > 5 years
Capital Allowances
Capital allowances are given on qualifying capital expenditure. Initial allowances are given only once while annual allowances are given every year by the straight line method. Some of the items accorded allowances are shown below.
Initial Allowances | Annual Allowances |
Industrial buildings: 10% Computer and IT equipment: 20% Environmental control equipment: 40% Motor vehicles, heavy machinery: 20% Plant and machinery: 20% Others :20% | Industrial buildings: 3% Computer and IT equipment: 80% Environmental control equipment: 20% Motor vehicles, heavy machinery: 20% Plant and machinery: 14% Others :10% |
Qualifying expenditure on private motor vehicles is restricted to RM 50,000 .
Qualifying expenditure on new private motor vehicle with total cost < RM 150,000, is restricted to RM 100,000
SME which incurred small value assets not exceeding RM 1,000 each, can claim annual allowance of 100%
Company in the private health care facilities business undertaking qualifying project or any project for expansion , modernization or refurbishment of an existing private health care facilities business, is allowed to to set off against statutory income with 100% of the qualifying capital expenditures incurred from 1.1.2010 to 31.12.2014.
Company in the private health care facilities business undertaking qualifying project or any project for expansion , modernization or refurbishment of an existing private health care facilities business, is allowed to to set off against statutory income with 100% of the qualifying capital expenditures incurred from 1.1.2010 to 31.12.2014.
Agriculture Allowance
Capital expenditure incurred on clearing, preparing of land for agriculture, planting of crops, construction of road or bridge on a farm : 50%
Capital expenditure incurred on living accommodation for persons working of a farm :20%
Capital expenditure incurred on other building : 10%
Forest Allowance
Capital expenditure incurred on the construction in a forest of a road or building used for extraction of timber from forest : 10%
Capital expenditure incurred on living accommodation for persons working for such extraction of timber : 20%
Labuan
Trading activities : 3% tax rate on audited net profit or RM 20,000 for a YA.
Non Trading activities : is exempted from tax
Royalty, interest, technical or management fees paid by offshore companies or rental of moveable property paid by offshore banks or leasing companies are exempted from withholding tax.
Labuan enjoys free port status and there is no indirect taxes and stamp duty.
Income is exempted from tax for services rendered in Labuan:
a) Fee received by non Malaysian directors of Labuan entity
b) 50% of the salaries of non Malaysian managers of Labuan entity
c) 50% of housing allowance and Labuan Territory allowance of Malaysian employed in Labuan entity.
d) 65% of statutory income derived by persons providing qualifying professional services in Labuan for Labuan entity
