Corporate Tax Rate
Introduction
Malaysia’s corporate tax structure is strategically set to draw foreign investment while ensuring that domestic companies contribute their fair share. The prevailing corporate tax rate stands at 24%. However, resident small and medium-sized enterprises (SMEs) benefit from a reduced rate on the first RM600,000 of taxable income, highlighting the government’s dedication to nurturing SME growth.
Additionally, various industries and business types may qualify for specific tax rates or incentives. These targeted rates are integral to Malaysia’s comprehensive economic plan, aimed at fostering expansion in crucial sectors and promoting innovation and development.
Corporate tax rate
The Malaysian Inland Revenue Board has revised the tax rates for SMEs for the tax year 2023. Under the new structure, the tax on the first RM150,000 of taxable income will decrease from 17% to 15%. The rates for subsequent income brackets will remain at 17% for incomes between RM150,001 and RM600,000, and 24% for amounts exceeding RM600,000. The tax rates are as follows:
Chargeable income | Tax Rate |
First RM150,000 | 15% |
RM150,001 to RM600,000 | 17% |
RM600,001 and above | 24% |
The criteria for classifying a company as an SME in Malaysia typically include annual sales turnover, the number of full-time employees, and the proportion of foreign shareholders. Companies that exceed these thresholds are considered non-SMEs and are taxed at the standard rate of 24%.
Conclusion
In summary, Malaysia’s corporate tax policy is carefully crafted to support business expansion and improve the economic environment, offering appealing tax rates, especially for SMEs. This tiered tax system underscores the government’s robust support for local enterprises, driving economic growth and making Malaysia a favorable destination for international investors.
