Malaysia has a comprehensive taxation system for companies that includes income tax, sales tax, and import duties. The government has implemented different tax rates and brackets to encourage investment and protect local industries. Companies operating in Malaysia should ensure that they comply with all tax laws and regulations to avoid any penalties or legal issues.
Income Tax:
All resident and non-resident companies are subject to income tax in Malaysia. Resident companies are taxed on their worldwide income, while non-resident companies are taxed only on their Malaysian source income. The current corporate tax rate in Malaysia is 24%.
Different Tax Brackets:
The tax rate varies according to the amount of taxable income. Companies with a taxable income of up to MYR 500,000 (approximately USD 120,000) are taxed at a rate of 17%. Companies with a taxable income between MYR 500,000 and MYR 1,000,000 are taxed at a rate of 20%, while companies with a taxable income above MYR 1,000,000 are taxed at the standard rate of 24%.
GST or VAT:
The Goods and Services Tax (GST) was introduced in Malaysia on April 1, 2015, but it was replaced by the Sales and Service Tax (SST) on September 1, 2018. The SST is a consumption tax that is levied on goods and services at different stages of the supply chain. The current rate of SST is 6%.
Sales Tax:
The sales tax is a tax levied on certain goods at the point of sale. It is imposed on specific goods that are produced in or imported into Malaysia. The current rate of sales tax varies between 5% to 10%, depending on the type of goods.
Import Duties:
Import duties are levied on imported goods to protect local industries and generate revenue for the government. The current import duty rate varies between 0% to 50%, depending on the type of goods. The government has also implemented a tariff rate quota system for certain goods, which means that a certain amount of the goods can be imported at a lower duty rate, while any excess amount will be subject to a higher duty rate.
Export Duties:
Malaysia does not impose any export duties on goods, except for certain items such as logs and sawn timber, crude palm oil, and cocoa beans.
Legislation:
The Income Tax Act 1967 governs corporate income tax in Malaysia. The Sales Tax Act 2018 and the Service Tax Act 2018 regulate the sales and service tax, while the Customs Act 1967 regulates import and export duties.
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