Basic tax information in Malaysia

INCOME TAX

Direct taxation in Malaysia is based on the unitary system and the basis of taxation is territorial in nature.

Only income that is accrued or derived from sources in Malaysia is liable to tax.

Income from foreign sources is liable to tax to the extent that it has its source of derivation in Malaysia by a resident company.

The basis of assessment of tax is on a current year basis and is self-assessed.

The self-assessment system and the current year basis of assessment require taxpayers to make estimate of tax payable for the current year of tax.

ESTIMATION OF TAX AND PAYMENT OF TAX

Resident companies are required to furnish their estimate of tax payable in the prescribed form not later than thirty days before the beginning of the basis period for that year of assessment.

The estimate shall not be less than 85% of the estimate of tax payable or revised estimate of tax payable for the immediately preceding year of assessment.

Revisions to the estimate of tax payable for the current year of assessment may be made in the sixth and ninth month of the basis period in the prescribed form.

Tax to be paid shall be made in equal monthly instalments in the basis period of that year of assessment and shall commence in the second month. The due date is the tenth day of each month.

Resident individuals do not have to furnish an estimate of tax payable. The estimate of tax payable will be determined by the Director General of the Inland Revenue Board together with the number of instalments of tax to be paid. In determining the estimate of tax payable and the number of instalments to be made consideration will be given to the tax assessed in the year of assessment preceding that year of assessment.

Payment should be made within thirty days of the due date.

An individual may apply in the prescribed form to revise the estimate of tax payable and the number of instalments not later than the thirtieth day of June in that year of assessment.

FILING OF TAX RETURN, ASSESSMENT AND BALANCE OF TAX PAYABLE

Companies have to file their income tax return and pay the balance of tax payable for the current year of assessment not later than the seventh month after the end of the basis period.

Individuals have to file their income tax return and pay the balance of tax payable for the current year of assessment not later than 30^th April of the following year. The basis year for individuals is the calendar year.

The income tax return filed shall be deemed to be the notice of assessment for that year of assessment.

INDIVIDUAL

1       INCOME TAX RATES

Chargeable Income		Tax Rate	Tax Payable
	RM	%	RM
First	2,500	0	0
Next	2,500	0	0
On	5,000		0
Next	5,000	2	100
On	10,000		100
Next	10,000	2	200
On	20,000		300
Next	15,000	6	900
On	35,000		1,200
Next	15,000	11	1,650
On	50,000		2,850
Next	20,000	19	3,800
On	70,000		6,650
Next	30,000	24	7,200
On	100,000		13,850
Next	50,000	26	13,000
On	150,000		26,850
Next	100,000	26	26,000
	250,000		52,850
Exceeding	250,000	26

INDIVIDUAL – continued

2       INCOME TAX REBATES

	RM
(a) Rebate given to taxpayer Resident
-                chargeable income not exceeding RM 35,000	400
Additional rebate for wife
-    If she does not elect for separate assessment or has no income or elects for combined assessment with husband	400
Additional rebate for husband
If he has no income or elects for combined assessment with wife	400
(b) Rebate given to wife if she elects for separate assessment or does not elect for combined assessment	400

(a)       INCOME TAX REBATE FOR ZAKAT, FITRAH OR ANY OTHER ISLAMIC RELIGIOUS DUES

Full rebate in respect of zakat, fitrah or any other Islamic religious dues paid.

3       PERSONAL RELIEFS

	RM
Taxpayer - Residents	9,000
Medical expenses for parents (Maximum)	5,000
Medical expenses for taxpayer, spouse and children on serious diseases (including RM 500 for medical examination expenses) (Maximum)	5,000
Disabled person:
Taxpayer	6,000
Spouse	3,500
Supporting equipment for disabled taxpayer, spouse, children or parent (Maximum)	5,000

INDIVIDUAL – continued

3       PERSONAL RELIEFS

Wife – if she has no total income or elects for combined assessment	3,000
Husband – if he has no total income or elects for combined assessment	3,000
Children:
Per child below the age of 18 years	1,000
Disabled child (unmarried)	5,000
Per child over the age of 18 years
Overseas universities, colleges or similar     establishments (degree level and above)	6,000
Local universities, colleges or similar establishments	6,000
Life insurance premiums / Approved fund contributions / Private pension fund	6,000
Private retirement scheme / Deferred annuity premium	3,000
Insurance premiums for education or medical benefits	3,000
Fees for acquiring technical, vocational, industrial, scientific or technologies skills or qualifications	5,000
Purchase of books, journals, magazines and other similar publications for the use of taxpayer, spouse or children	1,000
Purchase of computer (once in three years)	3,000
Amount deposited into Skim Simpanan Pendidikan Nasional for his or her child	6,000
Purchase of sports equipment	300
Interest paid on housing loan (conditions apply)	10,000
Broadband subscription	500

INDIVIDUAL – continued

3       PERSONAL RELIEFS - continued

Fees for acquiring technical, vocational, industrial, scientific or technologies skills or qualifications (Maximum)	5,000
Purchase of books, journals, magazines and other similar publications for the use of taxpayer, spouse or children	500
Interest expended to finance the purchase of a residential property (if the taxpayer fulfill the requirement as stipulated in S.46A of the ITA 1967)	Maximum deduction RM3,000

BENEFITS-IN-KIND AND PERQUSITES FROM EMPLOYMENT

Benefits–in-Kind and perquisites from employment are taxable and the Malaysian Inland Revenue Board has issued Public Rulings on the tax treatment of benefits-in-kind, living accommodation, leave passage, entertainment, ‘key-man’ insurance and perquisites from employment.

COMPANY

INCOME TAX RATES

·      Company with paid up capital of RM 2.5 million and below at the beginning of the basis period on first RM 500,000 chargeable income	- 20%
·      On subsequent chargeable income	- 25%
·      Company with paid up capital above RM 2.5 million at the beginning of the basis period	- 25%

OTHERS

INCOME TAX RATES

NON-RESIDENT PERSON                                                                       – 26%

TRUST BODY                                                                                             – 25%

COOPERATIVE SOCIETY – Scale rates

Maximum of 25% (Amounts above RM750,000)

LIMITED LIABILITY PARTNERSHIP – SAME AS COMPANY

OTHERS – continued

Concessionary rates apply to the following categories

Knowledge workers in Iskandar Malaysia                                               -15%

Returning Expert Programme                                                                   -15%

WITHHOLDING TAX RATES

Reference	Chargeable Person	Types of income	Tax Rates
S. 109 ITA 1967	Non- resident person	Interest	15%
S. 109 ITA 1967	Non- resident person	Royalties	10%
S. 109A ITA 1967	Non- resident person	Remuneration of public entertainer	15%
S. 109B ITA 1967	Non- resident person	Technical fee and installation fee for services performed in Malaysia and rent of moveable property	10%
S. 109A ITA 1967	Non- resident person contractor, consultant or professional	Service portion of contract payments	13% (10% and 3%)

REAL PROPERTY GAINS TAX RATES

Disposal of real property	Rates %
Disposal within 2 years after date of acquisition	15
Disposal in the 3rd year after date of acquisition	10
Disposal after the 5th year from the date of acquisition	0

Exemptions are available under certain circumstances.