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 abusiness, the investors should also study the taxation system that will apply to their company. Our team of specialists in company incorporation in Malaysia can offer assistance when complying with the local tax authorities.
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All companies with operations in Malaysia are required to register for tax purposes. Acompany 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 must be noted that the term taxable income in Malaysia also refers to other types of incomes, such as the ones obtained from rent, royalties, dividends or interest. In the case of dividends that are paid by a Malaysian to a foreigner, the withholding tax does not apply.
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 agents in company incorporation in Malaysia can offer more details.
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 17% corporate tax rate as well, under special conditions. It is important to know that the corporate tax rates were lowered at the beginning of 2016. The corporate income tax in Malaysia is charged as follows:
If you want a team of accountants in Malaysia, you can get in touch with our company which offers a wide range of services. Payroll and bookkeeping are among the most important, but you can also ask for support for tax registration, preparation of annual financial statements, debt monitoring, tax advice, and compliance. Company owners can also benefit from financial planning. Whatever your plans are, we recommend that you trust our specialists.
There are several types of withholding tax rates in Malaysia, which vary based on the type of income that must be charged here. Our consultants in company formation in Malaysia can present the full list of incomes that can be charged with the withholding taxes and you can find below a short presentation on the basic rates and types of incomes, as follows:
The obligations concerning the procedures for paying taxes in Malaysia will vary based on the type of entity that must make the respective tax payments (natural persons or legal entities). Our team of consultants in company incorporation in Malaysia can provide you with extensive information on this subject and can assist investors, local and foreign, in dealing with the tax and accounting regulations available here.
According to Malaysian legislation, the fiscal year, in which the income generated by an entity is measured, generally coincides with the calendar year. The accounting system available here is based on a self-assessment regime, in which the taxable entities are required to submit tax returns.
For companies, it is possible to make advance corporate tax payments, which can be paid each month of the year. However, the legislation requires one to make an annual tax return, which can be submitted in a period of seven months from the end of the financial year. Companies should be aware that if the tax returns are not submitted in due time, penalties can apply.
Investors are also liable to the 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. Acompany also has to pay social contributions at the Social Security Organization, at the rate of 1,75%, of the employee’s salary.
Persons who are employed in Malaysia must pay taxes in accordance with their income level and this is necessary for both Malaysian tax residents and non-residents. According to the Inland Revenue Board of Malaysia, a foreign person working in this country needs to be registered for taxation in a period of maximum of two months from the date at which the employment contract entered into force.
The foreign person will be liable for taxation in Malaysia only for the income obtained here, while in the case of tax residents, the legislation stipulates that the calculation of the taxes has to be done taking into consideration the global income obtained by such persons.
Foreign investors who want to open a company in Malaysia and hire a local or foreign workforce must know that the payment of the taxes associated with employment has to be done no later than the 15th of each month (taxes applicable for the salaries paid to the employees for the previous month).
Companies are also required to pay taxes in Malaysia when various documents are involved, such as legal, commercial, or financial papers. In this case, they will be liable to the payment of the stamp duty, which can be charged at a fixed rate, regardless of the nature of the document or its financial value, and another one which is calculated based on the value stipulated in the contract. It must be noted that one can benefit from an exemption on the payment of this tax in certain situations, which can be detailed by our specialists in company formation in Malaysia.
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 this country can address to our consultants in company incorporation in Malaysia.