Taxation in Malaysia

Taxation in Malaysia

Taxes definition

Plan

• Corporate Taxes
• Personal Income Tax
• Expatraite Tax
• Other Taxable
• Record Keeping
• Self-Assessment System

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Corporate Taxes

• Paid-up share capital of MYR 2.5 million and below:
• 20% on the first MYR 500,000 (19 percent from

YA 2016)

• 25% on every ringgit exceeding MYR 500,000

(24 percent from YA 2016)

• Corporate tax rates for companies resident in Malaysia: 25 percent (24 percent from YA 2016)

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Payments subject to withholding tax

• Interest – 15%
• Royalty – 10%
• Rental of movable properties – 10%
• Technical or management service fees – 10%
• Income of non-resident public entertainers – 15%
• Dividends – exempt
• Other income – 10%

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Personal income tax

• 26% , applies to income > than MYR 100,000 (12% in UZB)
• From YA 2020, 25%, apply to income of MYR 400,000 or >
• Non-residents are taxed at a fiat rate of 25% (28% from YA 2016)

It is mandatory to make monthly contributions to the Employees’ Provident Fund. In addition, employee earns < MYR 3000/mth, must make contributions to the Security Organization

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Expatriate taxes

• Non-resident tax rate
• Liable to Malaysian tax when it carries on a business through a permanent establishment and assessable on income accruing in/or derived from Malaysia

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Types of Income

• Special Classes of Income
• Rental of movable property
• Fees for technical or management services performed in Malaysia
• Payment for services rendered in Malaysia purchased from a non-resident person
• Real Estate Investment Trust (REIT):

Other than resident company

Non-resident company

Foreign investment institution

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Other Taxables

• Property taxes
• Imported Duty
• Exported Duty
• Excised Duty
• Inheritance/Gift Tax

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Record Keeping

• Taxpayer is required to keep the following documents for 7 years:
• EA/EC Form
• Original dividend vouchers
• Insurance premium receipts
• Books purchase receipts
• Medical receipts
• Donation Receipts
• Zakat receipts
• Children’s birth certificates
• Marriage certificate
• Other supporting documents
• Working sheets (if any)

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Self-Assesment System (SAS)

Pay

Monthly salary deductions are made for individuals having employment income

Self Assess

Taxpayers compute their own taxes

Fine

The ITRF is submitted to the IRBM together with the payment for the balance of the income tax payable to meet any shortfall in the monthly payments.

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THE END

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