Income Tax filing in Malaysia

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Income Tax Filing in Malaysia

Inland Revenue board of Malaysia is the government authority to collect revenue from corporate and individual. The process of income tax submission is totally online basis such as e-filing. Tax return filing on time and due date are submitted. Return is submitted as information of Passport copy or Identity Card for individual and incorporation number, corporate tax number is necessary for corporate tax filing. Online file is submitted as GIF format and acknowledgement email is returned from e-Draftar LHDN. As normal process, income tax practitioner shall input pin number, passport number, reference number and name.

That income is generated from business, employment, declaration of dividend, capital gaining and others are liable to pay tax. For more information tax rate is twenty five percent on capital gaining. Besides, tax rate is twenty percent on Small and Medium enterprises if income is generated limitation of RM 500,000 (1/2 million). Further information is important that service and goods tax rate is six percent. All entities shall submit tax return before thirty April of the year.

 Some different rules are applicable in terms of submission personal tax as follows:

  • If a person lives in Malaysia in total 182 (one hundred eighty two) days is liable to pay his/ her taxes.
  • If an individual lives in Malaysia ninety days in total between four years is liable to pay taxes.
  • If a person is living as residence of Malaysian is liable to pay taxes.

Notwithstanding anything written who will be considered eligible to pay taxes under rules shall pay his/ her tax to government.

The following income is taxable:

Profits, salary, interest, dividend, royalty, vehicle, property, consumption and some others income is taxable.

Tax is exempted from the following items:

  • Education charge is tax free due to given higher priority by the government
  • Medical and childcare income
  • Journal, magazine or book buyer
  • Broadband users
  • Relief of disable persons
  • Some Gifts

Note: There is no inheritance tax, wealth tax or gift tax in Malaysia and there are no estate duties too

Note: Only when income is generated tax will be applicable. No income no tax.

Company tax return policy in Malaysia

  1. As a private/ public limited company shall pay taxation within seven months of company incorporation and submit tax return by first quarter of the year.
  2. After selling any product or services within three months entity shall prepare to submit CP204 to Inland Revenue Board.
  3. Those companies paid up capital is lesser than RM 250,000 have to submit CP204 form of that year to IRB, Malaysia.

Note: When a company estimated a profit of the year shall be paid tax as installment to LHDN as monthly basis. The SME and Medium enterprises are advised to submit CP 204.If fail to submit CP204 the said category entities may cause of action of penalty of TM 200 to RM 2000.



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