Malaysia

Last modified: 10/01/2025 07:29

Corporate taxation

	Rate
Corporate income tax rate	24%
Branch tax rate	24%
Capital gains tax rate	10% or 2% (Note 1&2)

1. For acquisition of capital assets from 1.1.2024 onwards, 10% is imposed on chargeable income 
2. For acquisition of capital assets before 1.1.2024, 10% is imposed on chargeable income or 2% is imposed on gross disposal price

Residence: A company or a body of person carrying on a trade or business is resident in Malaysia for the basis period for a year of assessment if at any time during the basis year the management and control of its business or any one of its businesses are exercised in Malaysia.

Basis: Income tax is imposed on a territorial basis (except for income of a resident company carrying on a business of banking, insurance or sea or air transport which is assessable on a world income basis). Effective 1st January 2022, foreign income received in Malaysia by a person who is resident will be taxable. However, there are exceptions given in relation to such foreign income received in Malaysia, subject to certain conditions.

Taxable income: Taxable income is based on the profits from the audited financial statements with some adjustments. Taxable income includes gains or profits from a business, dividends other than single-tier dividends, interests and discounts, rents, royalties and premiums and other gains or profits not falling under any of the foregoing.

Significant local taxes on income: Besides the corporate income tax levied on a federal basis in Malaysia, there is no local tax imposed on income.

Alternative minimum tax: No.

Taxation of dividends: Malaysia is under the single-tier tax system where single-tier dividends paid by a company resident in Malaysia are exempted from tax in the hands of shareholders. With effect from 1st January 2022, foreign dividend income received in Malaysia by a person who is a resident will be taxable in Malaysia. However, exemptions are given on foreign dividend income received in Malaysia from 1st January 2022 until 31st December 2026, subject to the following conditions:- (a) dividend income has been subjected to tax in the country of origin which the income arises; (b) the headline tax rate in the country of origin is not less than 15%; and (c) comply with the economic substance requirements [“ESR”]. With effect from year of assessment 2023, either of the following must be fulfilled for the foreign dividend received in Malaysia to be exempted:- (1) the ESR condition; or (2) the “subjected to tax condition” and the “headline tax rate” condition.

Capital gains: (A). Real Property Gains Tax Gains from the sale of real property are subject to Real Property Gains Tax at a rate depending on the duration the property is held by the disposers. The rates applicable based on the duration the property held from the date of acquisition for disposal by companies are as follows:- 1. Company Incorporated in Malaysia, Trustee of a Trust, and a Body of Persons Registered Under Any Written Law in Malaysia: – up to 3 years – 30% – 4 years – 20% – 5 years – 15% – more than 5 years – 10% 2. Company Not Incorporated in Malaysia: – within 5 years – 30% – more than 5 years – 10% (B). Capital Gains Tax With effect from 1st January 2024, capital gains tax is imposed on gains from disposal of capital assets by companies, limited partnerships, co-operative societies and trust bodies as follows:- (a) Unlisted shares of companies incorporated in Malaysia; (b) Shares in a controlled company incorporated outside Malaysia which owns real property situated in Malaysia (subject to 75% threshold condition); or owns shares of another controlled company which owns real property in Malaysia (75% threshold condition applies) or owns both real property and shares of another controlled company (75% threshold condition applies); and (c) Moveable and immovable property situated outside Malaysia. Exemption is given for: – (a) Gains from disposal of shares in unlisted companies incorporated in Malaysia or shares in foreign incorporated companies deriving value from real property in Malaysia, made on or after 1 January 2024 to 29 February 2024; (b) Gains from disposal of all types of capital assets situated outside Malaysia (excluding intellectual property rights), which are received in Malaysia from 1 January 2024 to 31 December 2026; (c) Gains from disposal of unlisted shares of a company incorporated in Malaysia in relation to restructuring for an Initial Public Offering (IPO) from 1 March 2024 to 31 December 2028, subject to certain conditions; (d) Gains from disposal of unlisted shares of a company incorporated in Malaysia under a scheme of restructuring of companies in the same group from 1 March 2024 to 31 December 2028, subject to certain conditions; and (e) Gains from resident unit trust (which is not a Real Estate Investment Trust or Property Trust Fund listed on Bursa Malaysia) for disposals made on or after 1 January 2024 to 31 December 2028.

Losses: Business losses can be set off against income from all sources in the current year. Any unabsorbed business losses can be carried forward up to a maximum of 10 consecutive years of assessment to be utilised against income from any business source.

Foreign tax relief: A tax resident is entitled to claim foreign tax credits against tax charged in Malaysia in respect of the same income brought to tax in Malaysia and in another country. Where a treaty exists, bilateral credit is granted, restricted to the lower of the foreign tax paid or the Malaysian tax levied. In the absence of a tax treaty, unilateral credit is granted, restricted to half of the foreign tax paid.

Participation exemption: Not applicable

Holding-company regime: The principal activities of an investment holding company in Malaysia involves the holding of investments. If at least 80% of the company’s gross income is derived from holding of investments, the company (unlisted) is considered as an investment holding company subject to tax under Section 60F of the Income Tax Act 1967. As an investment holding company listed on the Malaysian Stock Exchange, it is subject to tax under Section 60FA of the Income Tax Act 1967. There are some restrictions/differences in tax treatment in respect of claim of allowable deductions against income for investment holding companies as compared with non-investment holding companies.

Tax-based incentives: A wide range of tax incentives is offered to the manufacturing, agriculture, tourism (including hotel), and approved services sectors involved in qualifying activities or promoted products. Some of the major tax incentives available are:- 1. Pioneer status [“PS”] The PS incentive grants tax exemption of 70% to 100% of the company’s statutory income beginning on the production date, defined as the day the production reaches 30% capacity, for a period of 5 to 10 years. 2. Investment tax allowance [“ITA”] The ITA incentive grants greater capital allowances for all approved expenditures for a certain number of years starting from the first capital expenditure, which can be used to offset company profits. The ITA incentive gives a 60% to 100% allowance on qualifying capital expenditure and the incentive period ranges from 5 to 10 years. Unused ITA during the incentive periods can be carried forward indefinitely. 3. Reinvestment Allowance [“RA”] Manufacturing and some agricultural companies that reinvest for expansion, automation, modernisation, or diversification within the same industry can qualify for RA incentive which lasts for 15 years from the first reinvestment, provided they have been in operation for 36 months. Similar to the ITA incentive, the RA gives a 60% allowance on capital expenditures incurred by a company, which can be offset against 70% of its business income. The company can offset against 100% of its business income if the company can maintain a certain productivity level set by the Ministry of Finance. 4. Malaysia Digital [“MD”] The MD Status (formerly known as Multimedia Super Corridor) offers eligible companies the option to enjoy either the reduced tax rate [“RTR”] or ITA on income derived from qualifying activities. Companies can enjoy a RTR of 5% to 10% for non-intellectual property income and 0% for intellectual property income for a period of 10 consecutive years of assessment. Companies opt for ITA will enjoy 60% to 100% allowance on qualifying capital expenditure for a period of 5 years.

Group relief/fiscal unity: A locally incorporated, resident company that qualifies for group relief may surrender up to 70% of its adjusted loss for a year of assessment to one or more related companies within the same group. The period in which a company may surrender its adjusted loss is restricted to the first 3 consecutive years of assessment following the basis period for the year of assessment in which it commences operations, subject to fulfilment of certain conditions.

Small company/alternative tax regimes: A Small and Medium Enterprise (i.e. company with paid-up capital of not more than MYR 2.5 million) and with gross business income of not more than MYR 50 million is taxed at the following rates:- – On the first MYR 150,000 of chargeable income – 15% – On the next MYR 450,000 of chargeable income – 17% – On the balance in excess of MYR 600,000 – 24%

Corporate taxation: compliance

Tax year: Income is assessed on a current year basis. A company is taxed on income from all sources (whether business or non-business) arising in its financial year ending in the calendar year that coincides with that particular year of assessment. Malaysia adopts a self-assessment system where the burden of computing the correct tax liability lies with the taxpayer.

Consolidated returns: There is no consolidated returns to be submitted by companies within a group.

Filing and payment: A company is required to furnish an annual income tax return by way of electronic submission to the Malaysian Inland Revenue Board within 7 months from the date following the close of accounts. With effect from year of assessment (“YA”) 2025, a company is required to submit specified documents through the Malaysian Income Tax Reporting System within 30 days after the due date for submission of the Return Form for the relevant YA. The company is required to furnish an estimate of its tax payable for a year of assessment not later than 30 days before the beginning of the basis period. The estimate of tax payable must be settled by monthly instalment commencing from the second month of the basis period. Under the self-assessment system, the return filed by a taxpayer will be deemed as a notice of assessment served upon the taxpayer. Any balance of tax payable after taking into account payments made via instalment scheme will have to be remitted to the Malaysian Inland Revenue Board not later than 7 months from the end of the accounting period. With effect from 1 January 2025, self-assessment system will be implemented for filing of the return for Real Property Gains Tax (“RPGT”). The RPGT return shall be due and payable within 90 days from the date of disposal of the chargeable asset.

Penalties: The offences and penalties are as follows:- 1. Default in furnishing a tax return form – a fine of up to MYR20,000 or imprisonment for a term not exceeding 6 months or both; or – a special penalty of treble the amount of tax which is payable (before any set-off, repayment or relief) where there is no prosecution. In practice, the Malaysian Inland Revenue Board will impose penalties ranging from 15% to 45% of the tax payable. 2. Failure to remit the tax instalments by the due date – a penalty of 10% on the instalment due. 3. Failure to remit the balance of tax payable under an assessment – a penalty of 10% on the balance of tax due. 4. Failure to submit specified documents – a fine of not less than MYR200 and not more than MYR20,000 or imprisonment for a term not exceeding 6 months or both. 5. Failure to remit the tax payable under RPGT by the due date – a penalty of 10% on the balance of tax due.

Rulings: To provide guidance on compliance with tax laws, the Director General of Inland Revenue is empowered by law to issue public rulings as well as guidelines to clarify on interpretation of tax law, tax treatments and procedures to be applied. A taxpayer may also request for an advance ruling from the Director General of Inland Revenue on how the provision of the law applies to an arrangement or transaction undertaken by the taxpayer.

Taxation of individuals

Resident Individual	Rate
0 – 5,000	0
5,001 – 20,000	1
20,001 – 35,000	3
35,001 – 50,000	6
50,001 – 70,000	11
70,001 – 100,000	19
100,000 – 400,000	25
400,001 – 600,000	26
600,001 – 2,000,000	28
Exceeding 2,000,000	30

Non-resident individuals are taxed at 30% flat rate.

Residence: The tax residence status of an individual for a basis year for a year of assessment is determined by reference to the physical presence of that individual in Malaysia. An individual would be regarded as a tax resident if that individual is in Malaysia for at least 182 days in a calendar year. In certain situations, the physical presence for the basis years preceding and following a particular year of assessment must also be taken into consideration in determining the residence status.

Basis: Income tax is imposed on income accruing in or derived from Malaysia by any person. Effective 1st January 2022, foreign-sourced income received in Malaysia by resident individuals are also subject to tax. Exemption from tax on foreign-sourced income received in Malaysia is granted for the period from 1st January 2022 to 31st December 2026 it is further extended until 31st December 2036 subject to conditions.

Taxable income: Gains or profits from an employment, profession or vacation are taxable if derived from Malaysia. Other taxable income includes dividends, interests and discounts, rents, royalties and premiums, pensions and annuities. Effective year of assessment 2008, the single-tier tax system for dividends has been established, where the tax on company profits is final and any dividends distributed are exempted from income tax at the shareholder level. With effect from 1st January 2025, Dividend Tax of 2% be imposed on chargeable dividend income received by individual shareholders (residents and non-residents), either through direct shareholding or a nominee in which the annual dividend income exceeds RM100,000.

Capital gains: Gains from the sale of real property are subject to Real Property Gains Tax at a rate depending on the duration the property is held by the disposers. The rates applicable based on the duration the property held from the date of acquisition for disposal by individuals are as follows:- 1. Malaysian Citizen / Permanent Resident – up to 3 years – 30% – 4 years – 20% – 5 years – 15% – more than 5 years – NIL 2. Non-Citizen – within 5 years – 30% – more than 5 years – 10%

Deductions and allowances: Resident individuals are entitled to claim for personal reliefs and other allowable deductions in computing their chargeable income for a year of assessment. Some examples of personal reliefs and allowable deductions are reliefs for self (MYR 9,000), husband/wife (MYR 4,000), child (ranging from MYR2,000 to MYR 8,000), lifestyle, life insurance premiums (MYR 3,000), contribution to approved pension fund (MYR 4,000), medical expenses for parents, interest paid on housing loans (MYR5,000 or MYR7,000) etc. Non-resident individuals are not eligible for tax reliefs.

Foreign tax relief: Similar to corporate taxation, resident individuals are eligible for claim of bilateral / unilateral credit (whichever is applicable) in respect of income brought to tax in Malaysia and in another country.

Taxation of individuals: compliance

Tax year: Income of individual are assessment on a calendar year basis and the year of assessment is the year coinciding with the calendar year.

Filing and payment: The due date for submission of annual tax return form are as follows: – 30th April of the following year for individuals without business income – 30th June of the following year for individuals with business income Upon submission of the tax return form, the taxpayer is deemed to have been served with a notice of assessment. Under the Monthly Tax Deduction [“MTD”] rules, employers are required to deduct MTD from the remuneration of employee in each month in accordance with the Schedule of MTD and remit to the Malaysian Inland Revenue of Board within a stipulated period. For individuals with business income, the individuals will remit payment of tax return under the bi-monthly instalment plan issued by the Inland Revenue Board. The balance of tax payable (after net of the MTD or bi-monthly instalment) under an assessment upon submission of a return is due and payable by the due date for submission of tax return.

Penalties: The offences and penalties are as follows:- 1. Default in furnishing a tax return form – a fine of MYR200 to MYR2,000 or imprisonment for a term not exceeding 6 months or both; or – a special penalty of treble the amount of tax which is payable (before any set-off, repayment or relief) where there is no prosecution. In practice, the Malaysian Inland Revenue Board will impose penalties ranging from 15% to 45% of the tax payable. 2. Failure to remit the bi-monthly tax instalments by the due date – a penalty of 10% on the instalment due 3. Failure to remit the balance of tax payable under the assessment – a penalty of 10% on the balance of tax due.

Rulings: To provide guidance on compliance with tax laws, the Director General of Inland Revenue is empowered by law to issue public rulings as well as guidelines to clarify on interpretation of tax law, tax treatments and procedures to be applied.

Withholding taxes

Type of Payment	Resident recipients		Non-residents recipients
	Company	Individual	Company	Individual
	Rate (%)	Rate (%)	Rate (%)	Rate (%)
Special classes of Income- Technical fee, payment for services, rent of moveable property	–	–	10	10
Interest	–	–	15	15
Royalty	–	–	10	10
Income of public entertainer	–	–	–	15
Interest (except exempt interest) paid by approved financial institution	–	5	–	–
Distribution of income by Real Estate Investment Trust	–	10	24	10
Distribution of income by Retail Money Market Fund	24	–	24	–
Distribution of income by Family Fund / Family Re-Takaful Fund / General Fund	–	8	25	8
Gain or profits under Section 4(f)	–	–	10	10
Service portion of contract payments made to Non-resident contractor	–	–	13	13
Payment in monetary form arising from sales transactions or schemes carried out by an agent, dealer or distributor	2	2	–	–
Contributions withdrawn from a deferred annuity or a Private Retirement Scheme before reaching the age of 55 (other than by reason of permanent total disablement, serious diseases, mental disability, death or permanently leaving Malaysia	–	8	–	–

Branch remittance tax: The branch of a foreign company carrying on a business in Malaysia will be subject to income tax at the rate of 24% on its income derived in Malaysia. There is no branch remittance tax levied on the after-tax profits remitted by the branch to its head office.

Anti-avoidance legislation

Transfer pricing: The Malaysian Inland Revenue Board has issued the Income Tax (Transfer Pricing) Rules 2023 [“TP Rules 2023”] on 29th May 2023 which is effective year of assessment 2023. The TP Rules 2023 replace the Income Tax (Transfer Pricing) Rules 2012 that were issued in 2012. Following the issuance of the TP Rules 2023, the Malaysian Inland Revenue Board released the new Malaysian Transfer Pricing Guidelines [“MTPG 2024”] and the Transfer Pricing Audit Framework 2024, on 24th December 2024. The MTPG 2024 have been updated to reflect amendments made to Section 140A, the introduction of Section 113B of the Income Tax Act 1967, and changes to the TP Rules 2023. The MTPG 2024 are effective year of assessment 2023 and subsequent years.

Taxpayers shall ensure that the contemporaneous transfer pricing documentation [“TPD”] be brought into existence prior to the due date for furnishing a return in the basis period for a year of assessment in which a controlled transaction is entered into.

The key amendments in the TP Rules 2023 include the following:- i. Mandatory to indicate the date of completion of the contemporaneous TPD ii. Introduction of a narrow arm’s length range (a range of figures or a single figure falling between the value of the 37.5 percentile to 62.5 percentile of the data set) iii. Preparation of the Schedules for the contemporaneous TPD

– Schedule 1 – Multinational Enterprise Group Information

– Schedule 2 – Taxpayer Business Information

– Schedule 3 – Cost Contribution Arrangement Information and Documents

The key amendments in the MTPG 2024 include the following:- i. The MTPG 2024 now exempt the following persons from preparing contemporaneous TPD:-

(a) Individuals not carrying on a business.

(b) individuals carrying on a business (including partnerships) who only engage in domestic controlled transactions.

(c) person who entered into controlled transactions with a total amounting to NOT more than MYR1 million; or

(d) person who entered solely into domestic controlled transactions with another person where both parties –

(i) do not enjoy tax incentives;

(ii) are taxed at the same headline tax rate; or

(iii) do not suffer losses for two consecutive years prior to the controlled transactions.

ii. Entities must prepare full TPD if they meet the following threshold:

(a) generates gross business income of more than MYR30 million in total and engages in cross-border controlled transactions totalling MYR10 million or more annually; or

(b) receives or provides controlled financial assistance of more than MYR50 million annually.

To ease the compliance burden, any person who enters into a controlled transaction but is exempted and does not fall under the above threshold is eligible to prepare a minimum contemporaneous TPD.

It is a legal requirement for taxpayers to furnish the contemporaneous TPD to the Director General of Inland Revenue within fourteen days of receipt of the written notice from the Malaysian Inland Revenue Board.

Taxpayers who fail to furnish contemporaneous TPD will be penalised under the Section 113B of the Income Tax Act 1967. If convicted as an offence, the taxpayer will be fined MYR20,000 to MYR100,000 or imprisonment term up to six (6) months or both. However, where there is no prosecution, the penalty is MYR20,000 to MYR100,000. In addition, a surcharge under the Section 140A(3C) of the Income Tax Act 1967, of not more than 5%, will be imposed on transfer pricing adjustments on all cases regardless whether the adjustments would give rise to any additional tax liability.

The amount of penalty under Section 113B that will be imposed based on the period of delay in submitting the TPD is as follows:

1) Up to 7 days – MYR20,000

2) More than 7 days up to 14 days – MYR40,000

3) More than 14 days up to 21 days – MYR60,000

4) More than 21 days up to 28 days – MYR80,000

5) More than 28 days – MYR100,000

Note: The period of delay is calculated from the expiration of a 14-day period from the date of service of the written notice until a complete TPD is submitted to Malaysian Inland Revenue Board. The Malaysian Income Tax (Country-by-Country Reporting) Rules 2016 were gazetted on 23rd December 2016. These Rules apply to multinational companies headquartered in Malaysia with a total group revenue exceeding MYR3 billion. They are required to furnish aggregate tax jurisdiction-wide information concerning the global allocation of income, taxes paid, and certain economic activity indicators across jurisdictions where the multinational company group operates. The Ultimate Holding entity of the multinational company group headquartered in Malaysia bears the responsibility for preparing and filing the Country-by-Country Report [“CbCR”] with the Malaysian Inland Revenue Board within one year from the end of their financial year. Malaysian taxpayers who are part of a multinational company group subject to CbCR requirements in another jurisdiction must notify the Malaysian Inland Revenue Board of their reporting entity and its residency status.

Interest restriction: Through Section 140C of the Income Tax Act 1967, the rules on the interest deductibility has been implemented and gazetted on 28th June 2019. On 5th July 2019, the Malaysian Inland Revenue Board released the Guidelines on “Restriction on Deductibility of Interest”. This legislation for restriction on the deductibility of interest is applicable to:- i. a person within the charge to tax under the Income Tax Act 1967 (except for specific categories of persons listed in Para 9 of the Guidelines); ii. a person having interest expenses from financial assistance which is deducted in ascertaining the adjusted income before any restriction on the deductibility of interest is made under Section 140C of the Income Tax Act 1967 of the person from each of the business source which is paid or payable to:- – its associated person outside Malaysia; – its associated person outside Malaysia which operates through a permanent establishment in Malaysia; – a third party outside Malaysia where the financial assistance is guaranteed by its holding company or any other enterprises under the same Multinational Enterprise Group (regardless of the tax residence country of the guarantor); and iii. the total amount of interest expense for all such financial assistance in a controlled transaction exceeds RM500,000 in the basis period for a year of assessment. The prescribed rules specify that the maximum amount of interest deduction allowed is 20% of the earnings before interest, taxes, depreciation, and amortisation (EBITDA) from each source consisting of a business. The interest expenses in excess of the maximum deduction allowed may be carried forward indefinitely to be deducted against future income. However, in the case of a company, the carry forward of the above-mentioned interest expenses would not be allowed if there is a substantial change in the company’s shareholders in the following year.

Controlled foreign companies: There are no CFC rules in Malaysia.

Hybrid mismatches: Not applicable.

Disclosure requirements: In Malaysia, companies are mandated to provide comprehensive details of controlled transactions and CbCR notifications in their annual tax return. The disclosure encompasses several critical aspects:- – TPD Requirement: Specify whether the company is obligated to prepare TPD as per Malaysian tax regulations – Company Activities and Characterization: Describe the core activities and business characterization of the company – Nature of Controlled Transaction: Clearly articulate the nature of each controlled transaction – Value of Controlled Transaction: Provide the exact value of each controlled transaction – Related Parties Details: Furnish information regarding the related parties involved in each transaction, including their relationship with the company and their respective roles – CbCR Requirements: Specify whether the company is subject to the Income Tax (Country-by-Country Reporting) Rules – CbCR Notifications: If the company is subject to the rules, it is required to complete the notification as a reporting entity or as a non-reporting entity, as provided in Form C

Exit taxes: No

General anti-avoidance rule: There are general anti-avoidance rules as provided under Section 140 of the Income Tax Act 1967 in Malaysia which allows the Director General of Inland Revenue to disregard, vary or make any adjustment which he deems fit, if there is a reason to believe that any transaction has the direct or indirect effect of evading, avoiding or altering the incidence of tax, to counter the whole or any part of any such direct or indirect effect of the transaction.

Digital services tax and Other significant anti-avoidance legislation: Effective 1st January 2020, foreign service providers need to charge and levy a service tax on services they provide to consumers in Malaysia. A foreign service provider who provides digital services to consumer in Malaysia and having sales turnover in Malaysia for 12 months period which exceeds MYR500,000 has to apply for registration via online.

Value-added tax/Goods and services tax

Type of tax: With effect from 1st September 2018, goods and services tax (GST) was abolished and replaced by sales tax [“SAT”] and service tax [“SET”]. Unlike GST which is a multi-layer tax, SAT and SET operate a single-stage tax system. SAT applies to buyers/consumers who purchase taxable goods manufactured locally by a registered manufacturer or imported taxable goods. SET applies to buyers/consumers who acquire taxable services from a registered person in Malaysia or from any person outside Malaysia.

Standard rate: SAT is imposed on taxable goods at the rate of 5% or 10%. SET is charged on taxable services at the rate of 8% except for certain categories.

Reduced rates: SET is charged on taxable services at the rate of 6% for food and beverages, telecommunication services, vehicle parking services and logistics services.

Registration: Any person engaged in the manufacturing of taxable goods and the total sale value of the taxable goods exceed the threshold of MYR500,000 for a rolling period of 12-month is required to apply to be a registered manufacturer for SAT purposes not later than the last day of the month following the month he is liable to be registered. In general, any person provides any taxable service and the total value of taxable service exceeds MYR500,000 in a rolling period of 12-month is required to apply to be a registered person for SET purposes not later than the last day of the month following the month he is liable to be registered. Please note that there are circumstances that the threshold for registration is nil or MYR1,500,000.

Filing and payment: The registered manufacturer / registered person is required to submit the SAT / SET return [“Form SST-02”] and make good of the SAT / SET payment on a bi-monthly basis. The filing and payment of SAT / SET is due on or before the last day of the following month after the end of the taxable period. Any non-registered person for SET purposes is required to file the SET return [“SST-02A”] and make the corresponding SET payment on a monthly basis. The filing and payment of SET is due on or before the last day of the following month after the end of the taxable period.

Social security contributions

The Employment Insurance System (EIS) and the Invalidity Pension Schemes (IPS), which are administered by the Social Security Organization (SOCSO), cover all employees earning less than MYR 6,000 per month. An employee who has entered the scheme once will remain covered even if the wages increase beyond MYR 6,000.

The employer and employee both contribute to the EIS and IPS. Contribution amount depends on employee salary, up to MYR 104.15 from employer and MYR 29.75 from employee. If the employee is not eligible for IPS, then only the employer must contribute, up to MYR 61.90.

In addition, the Employment Insurance System Act 2017 provides an insurance system for insured persons who have lost their employments by providing certain benefits and re-employment placement programme. Contribution amount depends on employee salary, up to MYR 11.90 each from employer and employee.

Self-employed

Self-employed may voluntarily contribute to SOCSO / EIS.

Other taxes

Capital duty: There is no other capital duty.

Immovable property taxes: Annual assessment is payable on residential property at 6% of the value assessed by the authorities. All landed properties also have to pay annual quit rent, typically MYR 0.01-0.02 per square foot.

Transfer tax: No

Stamp duty: The typical rate is 0.1% of contract value, but certain contracts have different rates. The marginal tax rate for the transfer of property based on the property value are as follows: – First MYR 100,000 – 1% – Next MYR 400,000 – 2% – Next MYR 500,000 – 3% – Subsequent amount in excess of MYR 1,000,000 – 4% Effective 1st January 2024, a flat rate of 4% on the instruments of transfer which are executed by foreign-owned companies and non-citizen individuals is imposed. Loan agreements are typically at 0.5%, but SMEs can get the following lower marginal rates with the approval of the Ministry of Finance based on the loan value as follows: – First MYR 250,000 – 0.05% – Next MYR 1,000,000 – 0.25% – Subsequent amount in excess of MYR 1,000,000 – 0.5%

Net wealth/worth tax: No

Inheritance/gift taxes: No

Other: Import duties are levied on ad valorem/specific basis on dutiable goods imported into the country. The ad valorem rates range from 0% to 60%. Excise duty are imposed on selected range of goods manufactured in Malaysia or imported into Malaysia which includes motorcycles, motor vehicles, liquor, cigarettes, tobacco, playing cards, and mahjong tiles.

Tax treaties

Foreigners can get lower tax rates, especially withholding tax rates, under certain tax treaties. Currently, Malaysia has concluded tax treaties with 78 countries.