You have registered your business in Malaysia. As a result, now you are ready to pay your Malaysia income tax. In order to do business in Malaysia, you must pay your taxes. When you register your business in Malaysia you also must register for the tax. In this article, we will go through all the latest information on Malaysia Income Tax Rate.
Are you Eligible to Pay Malaysia Income Tax?
Your income decides your tax. If you have an annual income of RM34000 then you must register a tax file. Income tax includes everything. Moreover, it includes your salary, business profit, interest, rent, pensions, bonuses, royalties, etc. You are exempted from income tax if you are employed for less than 60 days. Furthermore, if your income is earned from outside Malaysia then you don’t have to pay the tax also.
Tax rates vary from place to place. Take Portugal for instance. Income tax submission and filing in Portugal contains all the information on the income tax rates in Portugal.
Foreigners Income Tax in Malaysia
In Malaysia, every working citizen or non-citizen is entitled to pay income tax. If you are a foreigner in Malaysia and you have been employed for 182 days inside Malaysia, then you are entitled to pay the normal tax under the normal Malaysia income tax law. As a matter of fact, you must give notice within 2 months of your arrival in Malaysia.
Malaysia Tax Rates
| Chargeable Income (RM) | Calculation (RM) | Rate (%) | Tax (RM) |
| <5000 | First 5000 | 0 | 0 |
| 5001 – 20000 | First 5000 | 1 | 0 |
| 20001 – 35000 | First 20000 | 3 | 150 |
| 35001 – 50000 | First 35000 | 8 | 600 |
| 50001 – 70000 | First 50000 | 14 | 1800 |
| 70001 – 100000 | First 70000 | 21 | 4600 |
| 100001 – 250000 | First 100000 | 24 | 10900 |
| 250001 – 400000 | First 250000 | 24.5 | 46900 |
| 400001 – 600000 | First 400000 | 25 | 83650 |
| 600001 – 1000000 | First 600000 | 26 | 133650 |
| 1000001 – 2000000 | First 1000000 | 28 | 237650 |
| >2000000 | First 2000000 | 30 | 517650 |
Chargeable income = taxable income – any tax deduction and tax relief. Knowing this you can see from the table that the tax rate is increasing with your chargeable income. Reducing the chargeable income will reduce your final tax amount.
Malaysia income Tax rate for Non-Residents
If you stay in Malaysia for less than 182 days, you are regarded as a non-resident. Similarly, you must pay the tax for income. The rates vary for non-residents. Regardless of your nationality, if you stay in Malaysia for less than 182 days you are a non-resident. Tas rate for non-resident is provided below:
- Business at a rate of 30%
- Public entertainer at a rate of 15%
- Royalty at a rate of 10%
File Your Malaysia Income Tax
When you go to file your income tax returns you must visit the LHDN website. Whether you are a resident, non-resident or foreigner, you must fill up your designated form. Furthermore, residents without business will file the BE form. Individuals with business must file the B form, meanwhile, non-residents file for the M form. Moreover, there are certain deadlines for each form. You must follow the guidelines on the deadlines.
Income Declaration
On the Website you must fill up all the necessary boxes as required by LHDN. Likewise, any non-salary should not be missed as it can count as income from employment. Don’t include any income that is entitled to tax exemptions. Some prerequisites and benefits are taxable, but it has been exempted by the government. After you have successfully filled the form, it will automatically show you your aggregate income. Completing this step, you must later check for any possible tax deductions you are entitled. After all these steps you can see your total income.
Making Corrections to Your Malaysia Income Tax
After your submission of the forms, no changing or amendments can be done. In order to do that you have to submit an appeal for amendments. Of course, we will go through the steps you must follow to amend your mistakes. Such steps are as follows:
- On the form make corrections where necessary and put a signature next to it. You must make the tax calculations manually. If there is any due it must be paid before 30 April 2020
- You must attach a letter of appeal explaining. Also, it should contain the explanation of the changes you are making. Attach all documents testifying these changes. After doing these you must send the documents to the branch where you have registered.
- Your every amendment will be thoroughly checked by LHDN. The time needed for this amendment depends on the information and documents submitted.
Process of paying Malaysia Income Tax
Tax reliefs will make your final tax less. For this, you are eligible for a tax refund. Your refund will be automatically transferred to the bank account you have added to the tax form. Normally it takes 30 working days for this refund to come to your bank account. On the other hand, if your tax exceeds then you must pay them before the deadline. Some methods of payment are Online banking through FPX, online using credit card on ByrHASiL, Pos Malaysia, and via ATM. When you are paying with your credit card you must keep in mind that all banks do not allow paying government-related spending. However, some cards do have the facilities of government spending and add points to the card.
Late Malaysia Income Tax Submission
If you are late in submitting the tax, then you are penalized 10% on the balance of tax. An additional 5% will be added if the time is greater than 60 days.
Income Tax Assessment on Tax Notice
LHDN will provide you with a notice assessment. This contains all your taxable income, amount of tax due, etc. This assessment will be sent to you. You can check this and if you find any wrong information you must file an income tax appeal. This must be done within 30 days of the notice and sent to the LHDN branch where the assessment came. You must write a letter stating all the mistakes on the assessment. Furthermore, you must attach all supporting documents. All the necessary forms which you need are available at the LHDN office.
Conclusion
In this article, we have stated all the information you need for filing the Malaysia Income Tax. All the steps on how to assess your Tax form are available. However, penalties are there if you fail to follow the Malaysia Tax Laws. The range and percentage only vary but everyone in Malaysia must pay the Income Tax.