TAX IN MALAYSIA - Beginner Edition

Basic tax knowledge in Malaysia refers to understanding the fundamental concepts and
regulations related to taxation in the country. Here are some key points to help you grasp the
basics:
1. Tax System: Malaysia follows a self-assessment system, where taxpayers are
responsible for calculating and reporting their income and paying the corresponding
taxes.
2. Taxpayer Identification Number (TIN): Individuals and businesses in Malaysia are
required to obtain a Taxpayer Identification Number (TIN) or tax reference number for
tax purposes.
3. Tax Residency: Taxation in Malaysia is based on the concept of tax residency.
Residents are subject to tax on their worldwide income, while non-residents are taxed
only on income derived from Malaysia.
4. Types of Taxes: The main types of taxes in Malaysia include:
a. Income Tax: Individuals and companies are subject to income tax. Individual income tax
rates are progressive, ranging from 0% to 30% depending on the income bracket. Corporate
tax rates vary depending on the company's annual taxable income and industry.
b. Goods and Services Tax (GST): Malaysia used to have a Goods and Services Tax (GST)
system, but it was replaced by the Sales and Service Tax (SST) system in 2018.
c. Sales and Service Tax (SST): The SST is levied on the provision of goods and services by
businesses. It is administered by the Royal Malaysian Customs Department.
d. Real Property Gains Tax (RPGT): RPGT is imposed on the gains from the disposal of real
property in Malaysia. The tax rates depend on the holding period of the property.
5. Tax Filing and Payment: Individuals and businesses are required to file their tax returns
annually with the Inland Revenue Board of Malaysia (IRBM). The deadline for filing
varies depending on the type of taxpayer. Taxes are generally paid in installments
throughout the year based on estimated tax liabilities.
6. Tax Incentives: The Malaysian government offers various tax incentives to promote
investment and economic growth. These incentives include tax exemptions,
allowances, and deductions for eligible businesses and industries.
7. Tax Penalties: Non-compliance with tax obligations can result in penalties, fines, and
even legal consequences. It is important to meet the filing and payment deadlines and
maintain accurate records.
It's worth noting that tax regulations in Malaysia are subject to change, so it is advisable to
consult the official website of the Inland Revenue Board of Malaysia or seek professional
advice for the most up-to-date and accurate information.
To register for tax in Malaysia as a Malaysian, you can follow these step-by-step instructions:
1. Determine your Tax Resident Status: Determine whether you are a tax resident or
non-resident in Malaysia. Tax residents are individuals who have resided in Malaysia
for 182 days or more in a calendar year. Tax residents are subject to tax on their
worldwide income, while non-residents are taxed only on income derived from
Malaysia.
2. Obtain a Taxpayer Identification Number (TIN): If you don't have a Taxpayer
Identification Number (TIN) or tax reference number, you will need to apply for one.
The TIN is also known as the "Pendaftaran Cukai Pendapatan" (PCP) number.
3. Register with the Inland Revenue Board of Malaysia (IRBM): Visit the nearest IRBM
office or access the IRBM website (https://www.hasil.gov.my/) to register for tax. You
can find the necessary forms and guidelines on their website.
4. Complete the necessary forms: Depending on your circumstances, you may need to
complete different forms. The most common form for individual taxpayers is the Form
BE (Borang E) for income tax return filing. You may also need to complete additional
forms if you have business income or other specific types of income.
5. Gather supporting documents: Prepare the required supporting documents such as
your identification documents (e.g., MyKad or passport), bank statements,
employment income statements (EA form), and any other relevant documents related
to your income.
6. Submit your application: Submit the completed forms and supporting documents to
the IRBM office either in person or online, following the instructions provided by the
IRBM.
7. Attend a tax assessment interview (if required): The IRBM may request an interview to
assess your tax liability. Ensure you have all the necessary documents and be prepared
to answer any questions about your income sources and deductions.
8. Obtain a Notice of Assessment: Once your tax return is processed, the IRBM will issue
a Notice of Assessment indicating your tax liability or refund. This notice will provide
instructions on how to make the tax payment or claim a refund, if applicable.
9. Comply with tax obligations: Ensure you meet your tax payment obligations by the
specified due dates. It is important to keep proper records and retain relevant
documents for future reference.
10. Seek professional advice if needed: If you find the process complex or have specific
tax-related questions, consider consulting a tax professional or seeking assistance
from the IRBM directly.
Remember that tax regulations and procedures can change, so it is essential to refer to the
official website of the Inland Revenue Board of Malaysia (https://www.hasil.gov.my/) or
consult with a tax professional for the most up-to-date and accurate information.