Understanding Tax Rates for Company in Malaysia

Understanding Tax Rates for Company in Malaysia

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Taxation

For one to start business in Malaysia, it is imperative for them to understand company income tax regulations put forth by the Inland Revenue Board (LHDN) as well as Royal Malaysian Customs Department (RMCD). In Malaysia, Income Tax Act 1967 oversees the tax of companies in the country. In order to realize continued business growth, understanding and working within this act is key.

Definition Tax Rate for Company SME

SMEs are categorized as companies meeting specific criteria:

  • Paid up share capital of not in excess of RM2.5 million.
  • Generating gross income (business source) of not more than RM50 million.

From the Year of Assessment 2024, if a foreign company or non-Malaysian citizen owns more than 20% paid-up share capital, SMEs will not qualify for the 15% and 17% preferential tax rate. Therefore, in such cases, these companies will be taxed at a rate of 24%.

Corporate Income Tax 2024

As per the latest rates for Year Assessment 2024 and beyond, company tax rates are categorized as follows:

  • Companies with paid-up capital of RM 2.5 million or less at the start of the basis period and gross business income not exceeding RM50 million:
    • 15% on the first Chargeable income RM 150,000.
    • 17% on Chargeable income over RM150,000 up to RM600,000.
    • Chargeable income above RM600,001 is taxed at the rate of 24%.
  • Companies with paid-up capital of RM 2.5 million or more at the beginning of the basis period: 24% tax rate
  • Non-resident company/branch: 24% tax rate
Chargeable IncomePercentage (%)
First RM 150,00015
RM 150,001 to RM 600,00017
RM 600,001 and above24

For information on Malaysian company tax changes over the years click here.

Looking for expert opinions on taxation of Malaysian companies? Contact FastLane Audit & Tax Service for quality assistance.