Tax planning in Malaysia is an optimal solution for those who want to know what taxes are payable by companies they have as individuals and how to reduce them. Our tax advisors can guide you in this endeavor and offer complete tax planning services. When you want to open a company in Malaysia, you must understand the importance of tax planning.
| Quick Facts | |
|---|---|
| Tax optimization purposes | To reduce the tax burden for companies in Malaysia |
| Available minimization options | – paying loans in advance, – creating retirement plans, – deducting various business expenses, – creating charities. |
| Deduction of travel expenses | Possible |
| Retirement plans in Malaysia | A great tax minimization option to lower the corporate tax burden. |
| Credit payments in advance | Recommended |
| Deductions for company equipment & office supplies | Possible |
| Important taxes in Malaysia | – 24% corporate income tax, – 5%-10% sales and service tax, – 38% petroleum income tax, – up to 30% personal income tax |
| Choosing tax planning with our Malaysian experts | To obtain personalized assistance and support in a wide range of tax-related matters. To lower the amount of taxes in the firm with suitable options. |
| 19% tax deduction is offered for | Workers who pay the Employer Provident Funds. |
| Natural persons and tax deductions in Malaysia | – childcare subsidies, – private retirement plans, etc. |
| Tax deductions for medical expenses in Malaysia | Available option for natural persons who can receive around RM5000. |
| Planning taxes ahead | Recommended before the end of the financial year |
| Benefits for sole traders in Malaysia | Lower personal income tax |
| Pioneer Status in Malaysia | A governmental tax incentive that offers 100% tax exemptions for 10 years of business activity in Malaysia. |
| What we offer | Complete & tailored tax planning services in Malaysia |
Table of Contents
Why is it good to choose the right business structure from a tax point of view
Foreigners who want to set up a company in Malaysia should know the tax law, depending on the chosen business structure. This could be a good start for implementing proper tax planning in Malaysia. Sole proprietorships, partnerships, and public and private companies are subject to various taxes and liabilities. Moreover, Labuan companies can be an optimal option for those who want to pay less in taxes. On the other hand, even if the corporate tax rate in Malaysia is 24%, it can be reduced under certain conditions, such as in the case of companies that do not exceed the threshold of RM 50 million as annual gross income. However, we invite you to discover ourtax planning services if you are interested in company formation in Malaysia.
Amplifying tax deductions in Malaysia
Good tax planning must include various tax optimization strategies right from the beginning of the business. You can opt for various methods, and among them, the following are recommended:
- The deduction for the purchase of office supplies and equipment. Taxes can be recovered, but you can learn more about tax planning for companies in Malaysia from our specialists.
- 19% tax deduction is possible for employers who pay the Employer Provident Fund (EPF) under specific conditions.
- Travel allowances for official duties can also be part of tax deductions in Malaysia. Our tax advisor can tell you more abouttax planning for companies in Malaysia. This can also be an option for tax planning for sole proprietors in Malaysia.
About tax planning for individuals in Malaysia
Natural persons can also benefit from tax planning in Malaysia. Here are some solutions for tax planning for individuals in Malaysia:
- Childcare subsidies are available in Malaysia for a maximum amount of RM 2,400 per year. Interest on loan subsidies of maximum of RM 300,000.
- Private retirement schemes can also be part of tax planning for individuals in Malaysia. Our advisor can tell you more about tax planning in Malaysia.
Tax planning for sole proprietors in Malaysia can be explained by our team.
What are the “earning stripping rules” in Malaysia?
The tax system in Malaysia involves, since 2020, the “earning stripping rules”. This system is provided by the Income Tax Act 1967 in Malaysia. This scheme can be part oftax planning for companies in Malaysia. Here is what it entails:
- Multinational enterprises registered in Malaysia have a guarantee that they pay a fair share of taxes.
- Companies can deduct interest expenses for up to 20% from their Tax EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization).
- With the “earning stripping rules” scheme in Malaysia, tax evasion can be contested for a reasonable distribution of tax burdens of multinational companies registered in Malaysia.
Selecting a proper business entity and considering the tax advantages
When you want to open a company in Malaysia, it is good to know the tax system and choose an optimal entity. For example, a sole proprietorship in Malaysia may be advantageous due to various income tax advantages. Another choice may be a private limited company (Sdn Bhd), and different tax advantages for income exceeding RM 70,000. Here are some other details that may help you from a tax point of view when opening a company in Malaysia:
- in terms of tax incentives, there are companies activating under the Pioneer Status in Malaysia, and benefit from up to 100% tax exemptions for 10 years of activity. Among the conditions imposed, the company must develop its operations in a certain business sector;
- a qualified capital spending eligible for 60% to 100% deductions upon project approval may be an option for companies receiving Investment Tax Allowance (ITA) in Malaysia;
- for regional operations in Malaysia, newly established companies can receive various tax incentives. Taxes can be reduced to 0%, if the formalities are met;
- tax incentives are also available in the Information & Communication Technology sector of Malaysia.
You can opt for our Malaysian tax advisors to find out more about the tax system and the benefits offered to company owners in Malaysia.
E-invoicing has been implemented in Malaysia
Starting in 2025, the rule to use e-invoicing systems for all businesses in Malaysia has been implemented. This is a platform specifically created to improve tax compliance while easing the tax administration process of companies with activities in Malaysia. In other words, it is allowed to issue electronic invoices for services and products offered by businesses in Malaysia.
Supplementary tax breaks in Malaysia
You can benefit from tax incentives and exemptions in the Special Economic Zones of Malaysia as follows:
- up to 100% income tax exemptions for 15 years;
- 100% investment tax allowance for 5 years;
- no stamp duties for various acquisitions linked to the business in Malaysia;
- manufacturing/agricultural and tourism businesses established in the Northern Corridor Economic Region (NCER), the East Coast Economic Region (ECER), and Iskandar, Malaysia, are entitled to particular tax incentives.
We invite you to discover more about tax incentives in Malaysia and seek the help of our specialists. We can help you with tax planning in Malaysia, depending on the business you own.
In addition to helping with tax planning in Malaysia, our clients can also benefit from support for company incorporation in Malaysia. We can help you start a business in Malaysia by handling the procedures. Moreover, when you want to do business, you can opt for our accountants in Malaysia and discover the optimal services for the smooth functioning of the company. Contact us for an evaluation and extra information.