Any individual who earned more than RM34,000 per annum (after deduction of KWSP, SOCSO and EIS contributions) must register a tax file and declare income tax via e-filling of Form BE or Form M.

Form BE refers to income assessed under Section 4 (b) – 4 (f) of the Income Tax Act 1967 (ITA 1967) and be completed by individual tax residents who have income other than business.

Form M refers to income assessed under Section 4 (b) – 4 (f) of the ITA 1967 and be completed by individual non-tax residents who have income other than business.

Form BE & Form M submission deadline:

• Manually – on or before 30th of April
• Online – on or before 15th of May

Personal Income Tax Rate

• A resident individual is taxed at a scale rate [refer to LHDN Offical Portal – https://www.hasil.gov.my/en/]
• A non-resident individual is taxed at a flat rate of 30% on total taxable income.

Personal Income Tax Clearance

The Tax Clearance Letter (Surat Penyelesaian Cukai (SPC)) is a letter issued by LHDN to notify the employer of a deceased / retiring / resigning employee’s tax liability so that employer may make final payment of salary / compensation / gratuity to the employee.

Employer need to make application of tax clearance when the employee :

• Leaves Malaysia for period exceeding three (3) months; or
• Resign from current employment; or
• Retire; or
• Death

The employer is required to notify LHDN and apply for SPC not later than thirty (30) days before the date of the employee’s expected date of departure / termination of employment or, in the case of death, within thirty (30) days after the death.

Forms to be filled by employer:

• Form CP21 (Notification by Employer of Departure from the Country of an Employee); or
• Form CP22A (Tax Clearance Form for Cessation of Employment of Private Sector Employees); or
• Form CP22B (Tax Clearance Form for Cessation of Employment of Public Sector Employees); and
• SPC request check-list.

ITA s4 : Tax is imposed annually on individuals who receive income from:

Income generated from LLP will be taxed at LLP level only.  A LLP needs to provide estimate of tax payable and payment by instalments as provided in section 107C ITA.

Form PT refers to return form for a limited liability partnerships (LLP).

Form PT submission deadline:

All LLP must file the tax returns (Form PT) within seven (7) months from the date of closing of its basis period (i.e. accounting period).

Tax Rate for Limited Liability Partnership

Income tax shall be imposed on the chargeable income of a LLP for a year of assessment at the rate provided in Part 1 Schedule 1 of the ITA. However, the taxation of an LLP resident in Malaysia with a total capital contribution (whether in cash or in kind) of RM2.5 million and less at the beginning of the basis period for a year of assessment shall be at the rate as provided in paragraph 2D, Part 1 Schedule 1 of the ITA.

The above rate does not apply to the LLP if more than –

• 50% of the capital contribution (whether in cash or in kind) of the LLP is directly or indirectly contributed by a company;
• 50% of the paid-up capital in respect of ordinary shares of the company is directly or indirectly owned by the LLP; or
• 50% of the capital contribution (whether in cash or in kind) of the LLP and fifty percent of the paid-up capital in respect of ordinary shares of the company is directly or indirectly owned by another company.

Any individual who carries on business must register tax file and declare income tax via e-filling of Form B or Form P.

Form B and Form P refers to income assessed under Section 4 (a) – 4 (f) of the ITA 1967 and be completed by individual residents who have business income (sole proprietorship) or partnership.

Partnership is required to file annual income tax return via e-filling of Form P to show all the income earned and business expenses deducted by the partnership during the year although a partnership is not subjected to pay tax.

Form B and Form P submission deadline:

• Manually on or before 30th of June
• Online on or before 15th of July

Tax Rate of  Resident Individual

• A resident individual is taxed at a scale rate [refer to IRBM Official Portal – https://www.hasil.gov.my/en/]

Corporate income tax in Malaysia is a direct tax paid to the government imposed on both resident and non-resident companies that receive income from Malaysia. The corporate income tax rate varies based on the type of company.

Tax Rate

Form C submission deadline

Companies in Malaysia must submit the corporate income tax return within seven months of closing the accounts. Tax payable must be paid by the last day of the seventh month from closing the accounts.

Tax estimation (Form CP204)

Pursuant to subsection 107C (7A) of the ITA:

Companies are required to submit Form CP204 by e-Filing from the Year of Assessment 2018.

a) Company in operation:

Under subsection 107C (2) of the ITA 1967, companies, cooperatives, trust bodies and LLPs in operation must submit e-CP204 not later than 30 days before the commencement of the basis period for a year of assessment.

b) New companies operating:

Under paragraph 107C (4) (a) of the ITA 1967, for companies, cooperatives, trust bodies and LLPs that have just commenced operations and have a first basis period for a year of assessment of not less than six (6) months, e-CP204 must be submitted in a period of three (3) months from the date of commencement of operations of companies, cooperatives, trust bodies and LLPs.

• Minimum amount of Tax Estimate

Subsection 107C (3) of the ITA provides that the minimum amount of tax estimate for a year of assessment shall not less than 85% of the amount of the amendment of tax estimate or the tax estimate amount (if no amendment of tax estimate is submitted) for the immediate preceding year of assessment.

Companies, trust bodies, cooperatives and LLPs that have just started operations can determine the estimated tax payable for the first year of assessment according to the company’s estimated profit. The estimated tax payable for the first year of assessment will be the basis for determining the estimated tax for the following year of assessment.

• Amendment of Estimated Tax Payable (Form CP204A)

Companies, cooperatives, trust bodies and LLPs are allowed to amend the tax estimates payable by submitting e-CP204A.

Form CP204 for a year of assessment can be amended in the 6th or 9th month or both in the basis period for a year of assessment:

i) If the amendment is made within the 6th month, the instalment of the amendment in effect may be selected starting from the 5th or 6th instalment.

ii) If the amendment is made in the 9th month, the instalment of the amendment in effect can be selected starting from the 8th or 9th instalment.