Income tax in Malaysia
April 04, 2022
INDIVIDUAL TAXATION
Resident individuals are taxed on their Malaysian-sourced income. Married couples may file for joint assessment, but separate assessment is deemed to be more effective in lowering overall tax liability.
INCOME TAX
Taxable income includes (1) gains from a business, (2) partnership income, (3) employment income, (4) dividends, (5) interest, (6) rental income, (7) royalties and premiums, and (8) other gains or profits.
Taxable income is computed by deducting personal reliefs and other rebates from the gross income. Income tax is levied at progressive rates.
INCOME TAX 2018-2021 |
|
| TAXABLE INCOME, MYR (US$) | TAX RATE |
| Up to 5,000 (US$1,250) | 0% |
| 5,000 - 20,000 (US$5,000) | 1% on band over US$1,250 |
| 20,000 - 35,000 (US$8,750) | 5% on band over US$5,000 |
| 35,000 - 50,000 (US$12,500) | 10% on band over US$8,750 |
| 50,000 - 70,000 (US$17,500) | 16% on band over US$12,500 |
| 70,000 - 100,000 (US$25,000) | 21% on band over US$17,500 |
| 100,000 - 250,000 (US$62,500) | 24% on band over $25,000 |
| 250,000 - 400,000 (US$100,000) | 24.50% on band over US$62,500 |
| 400,000 – 600,000 (US$150,000) | 25% on all income over US$100,000 |
| 600,000 – 1,000,000 (US$250,000) | 26% on band over US$150,000 |
| Over 1,000,000 (US$250,000) | 28% on all income over US$250,000 |
| Source: Global Property Guide | |
INCOME TAX 2016 |
|
| TAXABLE INCOME, MYR (US$) | TAX RATE |
| Up to 5,000 (US$1,250) | 0% |
| 5,000 - 20,000 (US$5,000) | 1% on band over US$1,250 |
| 20,000 - 35,000 (US$8,750) | 5% on band over US$5,000 |
| 35,000 - 50,000 (US$12,500) | 10% on band over US$8,750 |
| 50,000 - 70,000 (US$17,500) | 16% on band over US$12,500 |
| 70,000 - 100,000 (US$25,000) | 21% on band over US$17,500 |
| 100,000 - 250,000 (US$62,500) | 24% on band over $25,000 |
| 250,000 - 400,000 (US$100,000) | 24.50% on band over US$62,500 |
| 400,000 - 600,000 (US$150,000) | 25% on band over US$100,000 |
| 600,000 - 1,000,000 (US$250,000) | 26% on band over US$150,000 |
| Over 1,000,000 (US$250,000) | 28% on all income over US$250,000 |
| Source: Global Property Guide | |
The following personal reliefs are granted to residents to reduce tax liability:
PERSONAL RELIEFS |
|
| Types of Relief | RM (US$) |
| Self | 9,000 (US$2,250) |
| Additional relief for disabled individual | 6,000 (US$1,500) |
| Spouse -Basic -Disabled (additional) |
4,000 (US$1000) 3,500 (US$875) |
| Child - per child below 18 years old - per child over 18 years old, unmarried and receiving higher education -Disabled child |
2,000 (US$500) 8,000 (US$2,000) 6,000 (US$1,500) |
| Life insurance premiums | 3,000 (US$750) max |
| Medical expenses for parents | 6,000 (US$1,500) max |
| Medical expenses for self, spouse or child | 5,000 (US$1,250) max |
| Purchase of supporting equipment for disabled spouse, children, parent, or self | 6,000 (US$1,500) max |
| Fees expended on approved courses | 7,000 (US$1,750) max |
| Cost of purchasing books, journals or other similar publications for enhancing knowledge | 1,000 (US$250) max |
If the resident individual´s chargeable (taxable) income is less than RM35,000 (US$8,750), additional rebates of RM400 (US$108) can each be claimed by the taxpayer and his spouse. These additional rebates apply for married couples, whether the couple is opting for either joint or separate assessment.
RENTAL INCOME
Rental income is taxed at progressive rates. Income-generating expenses are deductible from the gross rent such as interest expense, cost of repairs, assessment tax, quit rent, and agent´s commission. Depreciation does not qualify for tax deductions against income, and capital allowances are not available for residential and commercial buildings.
CAPITAL GAINS TAX
Disposals of Malaysian real property are subject to real property gains tax (RPGT). RPGT is levied at progressive rates, depending on the property´s ownership period or holding period prior to its sale.
REAL PROPERTY GAINS TAX - CITIZENS 2019-2021 |
|
| OWNERSHIP PERIOD | TAX RATE |
| Up to 3 years | 30% |
| 3 years - 4 years | 20% |
| 4 years - 5 years | 15% |
| Over 5 years | 5% |
| Source: Global Property Guide | |
Transfer of property between spouses are exempted from real property gains tax.
PROPERTY TAX
Assessment Tax on Residential Property
The assessment tax is a local tax based on the annual rental value of the property, as assessed by the local authorities. It is generally levied at a flat rate of 6% for residential properties and payable in two installments.
Quit Rent
The quit rent is a local tax levied on all landed properties, payable annually at a rate of 1 sen (US$0.003) to 2 sen (US$0.006) per square foot, wherein MYR1 (US$0.25) is equal to 100 sen (cents). The quit rent liability is generally estimated to be less than MYR100 (US$25) per year.
CORPORATE TAXATION
INCOME TAX
Income and capital gains earned by resident companies are subject to corporate income tax at progressive rates. Income-generating expenses are deductible when calculating taxable income.
Resident companies with paid-up capital of MYR2.5 million (US$625,000) or less are taxed at the following progressive rates:
CORPORATE INCOMTE TAX 2019-2021 |
|
| TAXABLE INCOME, MYR (US$) | TAX RATE |
| Up to 500,000 (US$125,000) | 17% |
| Over 500,000 (US$125,000) | 24% |
| Source: Global Property Guide | |
CAPITAL GAINS TAX
Disposals of Malaysian real property are subject to real property gains tax (RPGT). RPGT is levied at progressive rates, depending on the property´s ownership period or holding period prior to its sale.
REAL PROPERTY GAINS TAX - COMPANIES 2019-2021 |
|
| OWNERSHIP PERIOD | TAX RATE |
| Up to 3 years | 30% |
| 3 years - 4 years | 20% |
| 4 years - 5 years | 15% |
| Over 5 years | 10% |
| Source: Global Property Guide | |