Overview of Malaysia’s Taxation System [Issue 1 of 2]
Introduction
Malaysia’s tax framework is crucial for its economic development, supporting public services and funding development projects. This overview helps navigate the complexities of the Malaysian tax system.
Tax Types in Malaysia
The system includes direct taxes like income tax for individuals and corporations, as well as indirect taxes such as the Sales and Service Tax (SST) and customs duties. Direct taxes are based on income levels, promoting a progressive tax contribution, while indirect taxes target consumption, aiding in economic regulation.
Corporate Taxation
Malaysia offers a competitive corporate tax rate of 24% to foster foreign investment and support domestic businesses. Small and medium enterprises (SMEs) enjoy reduced rates to encourage their growth. Recent adjustments for SMEs set the tax rate at 15% for the first MYR 150,000 of income, with subsequent brackets taxed at higher rates.
Advanced Corporate Tax Payments
Companies use Form CP204 to estimate and pay corporate taxes in advance. Revisions allow amendments to these estimates in the 6th, 9th, and newly added 11th month of the assessment year.
Stay tune for the upcoming newsletter, we will share with you more on Overview of Malaysia’s Taxation System.
