Understand the basics of Malaysia’s taxation system. How to calculate tax for businesses and individuals. How to maximise your tax planning efficiently.

 

Tax

Tax is a compulsory payment to a government from individual income, business profit, and charged on sales of goods and services. This money is used to pay for the running of a country including education, public healthcare, and other public services.

In this world nothing can be said to be certain, except death and taxes. ~ Benjamin Franklin

 

Tax Residency

Malaysia Income Tax Act 1967 – Section 7 – 1

(a) An individual is a tax resident in Malaysia if present in Malaysia on basis year for 182 days or more in a calendar year.

(b) Preceding/following period qualifies if linked to period of 182 consecutive days. Temporary absences are ignored:-

  • Connected with services in Malaysia attending conferences, seminars or studies.
  • Ill health of self or immediate family
  • Social visit not exceeding 14 days

(c) In Malaysia 90 days or more days for 3 out of 4 preceding years as a tax resident OR present in Malaysia for more than 90 years.

(d) In last 4 years if individual has been tax resident for preceding 3 years.

Tax Resident vs Non-Resident

  • Resident tax scales progressively from 0%-28% VS non-resident tax flat at 28%
  • Exemption on royalty income VS no exemption
  • Personal tax relief (Self/spouse/children, insurance, lifestyle, etc) VS no relief