Paying Taxes in Malaysia
Updated on Wednesday 14th September 2016
Rate this article 2 reviewsbased on
Foreign entrepreneurs who want to open a company in Malaysia are advised to invest on this market, because the conditions available for foreigners have been improved by the local authorities. However, when choosing a foreign location for a business, the investors should also study the taxation system that will apply to their company. Our team of company incorporation representatives in Malaysia can offer assistance when complying with the local tax authorities.
Taxation system applicable to companies in Malaysia
All companies with operations in Malaysia are required to register for tax purposes. A company is considered a tax resident in Malaysia if the management and control of the company are performed here.
Foreign investors interested in company formation in Malaysia will be taxed only in respect to the income produced on the territory of the country. It is important to know that the taxable income in Malaysia refers also to a wide area of incomes derived from dividends, interest, royalties or rents. The dividends which are paid to a foreigner are not subjected to withholding tax.
Foreign entrepreneurs should also know that Malaysia does not impose any tax on the capital gains for most of the business activities carried out here, but the tax is applicable in the case of real estate transactions; our team of company incorporation agents in Malaysia can offer more details.
Corporate taxes in Malaysia
As a general rule, companies registered in Malaysia are taxed at a rate of 24% on the corporate income, but the local authorities impose a 19% corporate tax rate as well, under special conditions. It is important to know that the corporate tax rates were lowered by 1% each of them at the beginning of 2016.
Investors are also liable to payroll tax, a tax imposed on the company for the activity of the employees. The tax is withheld by the company and redistributed to the Malaysian tax authorities. A company also has to pay social contributions at the Social Security Organization, at the rate of 1,75%, from the employee’s salary.
In the situation in which a shareholder is interested in selling his or her shares, the transfer will be taxed at a 0,3% rate applied on the value of the transfer.
Businessmen interested in receiving more details on the corporate taxes available in Malaysia can address to our company incorporation consultants in Malaysia.