Income tax in Malaysia

March 31, 2016

INDIVIDUAL TAXATION

Malaysia condominiums

Resident individuals are taxed on their Malaysian-sourced income. Married couples may file for joint assessment, but separate assessment is deemed to be more effective in lowering overall tax liability.


INCOME TAX

Taxable income includes (1) gains from a business, (2) partnership income, (3) employment income, (4) dividends, (5) interest, (6) rental income, (7) royalties and premiums, and (8) other gains or profits.

Taxable income is computed by deducting personal reliefs and other rebates from the gross income. Income tax is levied at progressive rates.

INCOME TAX 2015

TAXABLE INCOME, MYR (US$) TAX RATE
Up to 5,000 (US$1,250) 0%
5,000 – 20,000 (US$5,000) 1% on band over US$1,250
20,000 – 35,000 (US$8,750) 5% on band over US$5,000
35,000 – 50,000 (US$12,500) 10% on band over US$8,750
50,000 – 70,000 (US$17,500) 16% on band over US$12,500
70,000 – 100,000 (US$25,000) 21% on band over US$17,500
100,000 – 250,000 (US$62,500) 24% on band over $25,000
250,000 – 400,000 (US$100,000) 24.50% on band over US$62,500
Over 400,000 (US$100,000) 25% on all income over US$100,000
Source: Global Property Guide

INCOME TAX 2016

TAXABLE INCOME, MYR (US$) TAX RATE
Up to 5,000 (US$1,250) 0%
5,000 – 20,000 (US$5,000) 1% on band over US$1,250
20,000 – 35,000 (US$8,750) 5% on band over US$5,000
35,000 – 50,000 (US$12,500) 10% on band over US$8,750
50,000 – 70,000 (US$17,500) 16% on band over US$12,500
70,000 – 100,000 (US$25,000) 21% on band over US$17,500
100,000 – 250,000 (US$62,500) 24% on band over $25,000
250,000 – 400,000 (US$100,000) 24.50% on band over US$62,500
400,000 – 600,000 (US$150,000) 25% on band over US$100,000
600,000 – 1,000,000 (US$250,000) 26% on band over US$150,000
Over 1,000,000 (US$250,000) 28% on all income over US$250,000
Source: Global Property Guide

The following personal reliefs are granted to residents to reduce tax liability:

PERSONAL RELIEFS

Types of Relief RM (US$)
Self 9,000 (US$2,250)
Additional relief for disabled individual 6,000 (US$1,500)
Spouse
-Basic
-Disabled
4,000 (US$1000)
3,500 (US$875)
Child
- per child below 18 years old
- per child over 18 years old, unmarried and receiving higher education
-Disabled child
2,000 (US$500)
8,000 (US$2,000)


6,000 (US$1,500)
Life insurance premiums 6,000 (US$1,500) max
Medical expenses for parents 6,000 (US$1,500) max
Medical expenses for self, spouse or child 5,000 (US$1,250) max
Purchase of supporting equipment for disabled spouse, children, parent, or self 6,000 (US$1,500) max
Fees expended on approved courses 7,000 (US$1,750) max
Cost of purchasing books, journals or other similar publications for enhancing knowledge 1,000 (US$250) max

If the resident individual’s chargeable (taxable) income is less than RM35,000 (US$8,750), additional rebates of RM400 (US$108) can each be claimed by the taxpayer and his spouse. These additional rebates apply for married couples, whether the couple is opting for either joint or separate assessment.

RENTAL INCOME
Rental income is taxed at progressive rates. Income-generating expenses are deductible from the gross rent such as interest expense, cost of repairs, assessment tax, quit rent, and agent’s commission. Depreciation does not qualify for tax deductions against income, and capital allowances are not available for residential and commercial buildings.

CAPITAL GAINS TAX

Disposals of Malaysian real property are subject to real property gains tax (RPGT). RPGT is levied at progressive rates, depending on the property’s ownership period or holding period prior to its sale.

REAL PROPERTY GAINS TAX - CITIZENS 2014

OWNERSHIP PERIOD TAX RATE
Up to 3 years 30%
3 years - 4 years 20%
4 years – 5 years 15%
Over 5 years 0%
Source: Global Property Guide

Transfer of property between spouses are exempted from real property gains tax.

PROPERTY TAX


Assessment Tax on Residential Property

The assessment tax is a local tax based on the annual rental value of the property, as assessed by the local authorities. It is generally levied at a flat rate of 6% for residential properties and payable in two installments.

Quit Rent

The quit rent is a local tax levied on all landed properties, payable annually at a rate of 1 sen (US$0.003) to 2 sen (US$0.006) per square foot, wherein MYR1 (US$0.25) is equal to 100 sen (cents). The quit rent liability is generally estimated to be less than MYR100 (US$25) per year.

CORPORATE TAXATION

INCOME TAX

Income and capital gains earned by resident companies are subject to corporate income tax at progressive rates. Income-generating expenses are deductible when calculating taxable income.

CORPORATE INCOMTE TAX 2015

TAXABLE INCOME, MYR (US$) TAX RATE
Up to 500,000 (US$125,000) 20%
Over 500,000 (US$125,000) 25%
Source: Global Property Guide

CORPORATE INCOMTE TAX 2016

TAXABLE INCOME, MYR (US$) TAX RATE
Up to 500,000 (US$125,000) 19%
Over 500,000 (US$125,000) 24%
Source: Global Property Guide

CAPITAL GAINS TAX

Disposals of Malaysian real property are subject to real property gains tax (RPGT). RPGT is levied at progressive rates, depending on the property’s ownership period or holding period prior to its sale.

REAL PROPERTY GAINS TAX - COMPANIES 2014

OWNERSHIP PERIOD TAX RATE
Up to 3 years 30%
3 years - 4 years 20%
4 years – 5 years 15%
Over 5 years 5%
Source: Global Property Guide

Comments

ZIA | June 28, 2010

as an expatriate, if i buy a property in malaysia, will i get visa to stay

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