Taxes in Malaysia

In Malaysia, income is taxed when it is derived or accrues in Malaysia. For companies, however, world income would be taxable under Income tax laws for companies that are Malaysian residents and engaged in the business of sea/air transport, insurance or banking.
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Individuals – For resident individuals -

  • Ist Band – Income under RM5,000 is not chargeable to any tax but on the next RM15,000, 1% (or RM150) must be paid. This rate was 2% for YA 2014.
  • IInd Band – On the first RM20,000, RM150 must be paid as income tax and on the next RM15,000, 5% (or RM750) must be paid. This rate was 6% for YA 2014.
  • IIIrd Band – On the first RM35,000, RM900 must be paid as income tax and on the next RM15,000, 10% (or RM1,500) must be paid. This rate was 11% for YA 2014.
  • IVth Band – On the first RM50,000, RM2,400 must be paid as income tax and on the next RM20,000, 16% (or RM3,200) must be paid. This rate was 19% for YA 2014.
  • Vth Band – On the first RM70,000, RM5,600 must be paid as income tax and on the next RM30,000, 21% (or RM6,300) must be paid. This rate was 24% for YA 2014.
  • VIth Band – On the first RM100,000, RM11,900 must be paid as income tax and on the next RM1,50,000, 24% (or RM36,000) must be paid. This rate was 26% for YA 2014.
  • VIIth Band – This is one of the two new bands that have been added to YA 2015. It states that on the first RM250,000, RM47,900 must be paid as income tax and on the next RM1,50,000, 24.5% (or RM36,750) must be paid. This rate was 26% for YA 2014.
  • VIIIth Band – This is the other new band that has been added to YA 2015. As per this band, on the first RM400,000, RM85,650 must be paid as income tax and on any amount over RM400,000, the rate of income tax shall be 25%. This rate was 26% for YA 2014.

The rules for tax residence status are the same as those followed in the previous years.
Taxes in Malaysia 2015
Companies – The residency for companies is determined by their place of control and management, for instance, Malaysia.

For resident companies, the standard tax rate is 25%.
For resident companies that have a paid up capital of RM2.5 million or less, different tax scales are applicable. However, to be taxed at these rates, the company must not be a part of a company group wherein one of the companies has a paid up capital of over RM2.5 million. On the first RM500,000, the rate of tax shall be 20% and for income above RM500,000, 25% tax rate shall be charged. This is the same as the rates applicable for YA 2014.

From 2016, the rates for the second category shall be reduced to 19% and 24% respectively.

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