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Malaysia Tax System
🇲🇾 Malaysia Tax System Overview
Understanding Your Tax Obligations & How We Can Help
Malaysia uses a self-assessment tax system based on the current year. Taxpayers are responsible for correctly declaring and paying their taxes. The Malaysian tax framework includes both direct and indirect taxes, and follows a territorial scope, meaning only income earned or derived within Malaysia is generally taxable—unless specified otherwise.
🧾 Types of Taxes in Malaysia
✅ Direct Taxes
Direct taxes in Malaysia are administered by the Inland Revenue Board (IRB) under the Income Tax Act 1967.
The income tax is imposed on individuals and corporate entities, with the rate increasing in tandem with the taxpayer's income or profits. In the case of partnerships, taxes are not imposed on the entity itself, but rather on each partner’s share of profit.
The real property gains tax (RPGT) is charged on profits earned from the disposal of real estate in Malaysia or shares in a Real Property Company (RPC). From 2016 onwards, RPGT follows a self-assessment model aligned with the government's tax modernization efforts.
The petroleum income tax applies to petroleum-related business operations and is governed by the Petroleum (Income Tax) Act 1967. Businesses involved in petroleum operations are required to submit their audited financial statements to the IRB within three months after the financial year ends.
✅ Indirect Taxes
Indirect taxes are governed by the Royal Malaysian Customs Department.
The Goods and Services Tax (GST), which was implemented in April 2015 and later suspended, functioned as a multi-stage value-added tax. It applied to most goods and services produced in Malaysia, including imported goods, except those specifically listed under zero-rated or exempt supplies. Businesses with annual turnover exceeding RM500,000 were required to register for GST.
Excise duty is imposed on selected imported and locally manufactured goods such as alcohol, tobacco products, motor vehicles, playing cards, and mahjong tiles. These goods must be declared using the proper customs documentation and duties paid before clearance.
Customs duty is applied to imported goods and calculated based on rates outlined in the Customs Duties Order 1996. These duties may include import, export, and sales tax depending on the type and classification of goods.
Stamp duty is levied on legal instruments related to property transfers, mortgages, and share transactions. Rates vary, typically between 0.3% and 3%, depending on the nature of the transaction. Some exemptions may apply in cases involving corporate restructuring or intra-group asset transfers.
🌍 Scope of Taxation in Malaysia
Malaysia practices a territorial tax system. Income that is derived or accrued within Malaysia is subject to tax. Foreign-sourced income is generally exempt from tax, except in the case of Malaysian-resident companies that engage in banking, insurance, or maritime and aviation services.
Malaysia has signed numerous Double Taxation Agreements (DTAs) with other countries, allowing businesses and individuals to avoid being taxed twice on the same income.
💼 How We Can Help You
Our firm is a licensed tax agent registered under Section 153(3) of the Income Tax Act 1967 and is also a GST agent recognized by the Royal Malaysian Customs Department. We provide expert tax services to individuals and companies, helping them remain fully compliant with all relevant tax legislation and regulatory requirements.
We assist our clients in preparing and submitting all required tax forms and returns accurately and on time. Our team also calculates tax liabilities while ensuring that all available deductions, exemptions, and rebates are fully utilized.
In cases of tax disputes, appeals, or reassessments, we correspond directly with the Inland Revenue Board (IRB) on your behalf. We also provide advisory services on income tax incentives that are most relevant and beneficial for your business or personal situation.
Our GST advisory services include end-to-end support—from initial registration, return preparation and submission, to resolving technical GST issues. We also ensure your GST processes align with the latest legislation and best practices as enforced by the Customs Department.
🤝 Why Choose Us
We are officially licensed and recognized by both the IRB and the Royal Malaysian Customs Department, giving you confidence in our professional representation. Our expertise is backed by continuous updates on public rulings, tax audit frameworks, and the latest incentives or exemptions available to taxpayers.
We deliver complete tax solutions—from routine compliance to complex advisory—and all our recommendations are tailored specifically to your industry, structure, and tax exposure.