What are the tax considerations in Malaysia?
- Malaysia does not charge tax on international sales except for banks, insurance companies, airlines and shipping companies;
- No withholding tax on dividends or branch profits means that foreign entrepreneurs and investors can easily receive the returns on their Malaysian investment from anywhere in the world;
- Imports originating from another ASEAN treaty nation (Brunei, Indonesia, Singapore, Thailand, Vietnam, Laos, Burma, Cambodia and the Philippines) are exempt from import taxes and duty;
- Businesses in technology and creative industries can apply for MSC Status, which grants time-limited tax exemptions and incentives in many cases;
- Corporate tax in Malaysia for both resident and non-resident companies is 25% on taxable income;
- Resident individuals with more than MYR1 million of taxable income are subjected to 28% personal income tax;
- Non-resident individuals are subjected to a personal income tax of 28%;
- Withholding tax for interest is 15% while that of royalty derived from Malaysia is 10%;
- Since April 2015, the Goods and Service Tax (GST) is 6% and all companies in Malaysia with an annual turnover above MYR500,000 must sign up for GST.
What are the countries that have signed Double Taxation Agreements with Malaysia?
What are some tax incentives available in Malaysia?
- Manufacturing/Services/Trading Sector
- Pioneer Status (PS) is a scheme where 70% of the income will not be chargeable for five years, starting from the first day of production;
- Investment Tax Allowance (ITA) is a tax incentive where 60% of the Qualifying Capital Expenditure is offset against 70% of the statutory income for five years.
- Companies must be approved as a Bionexus Status Company from the Biotechnology Corporation Sdn Bhd in Malaysia to be entitled to tax incentives;
- 100% tax exemption is given to new companies for up to 10 years as well as to expansion projects for up to 5 years;
- Stamp duties and real property gains tax are exempted;
- Import duty for raw materials are also not subjected to tax.
- Green Incentives
- If a company purchases any green technology equipment, it can claim an investment tax allowance;
- The income generated from the use of such technology will be subjected to income tax exemption.