{"id":226,"date":"2023-03-20T12:06:01","date_gmt":"2023-03-20T04:06:01","guid":{"rendered":"https:\/\/foundingbird.com\/?p=226"},"modified":"2023-04-11T21:04:42","modified_gmt":"2023-04-11T13:04:42","slug":"taxes-for-sdn-bhd-company","status":"publish","type":"post","link":"https:\/\/foundingbird.com\/my\/blog\/taxes-for-sdn-bhd-company","title":{"rendered":"6 important company taxes in Malaysia (with tax rates of 2021)"},"content":{"rendered":"\n

Running your business as a separate legal entity through a private limited company<\/a> provides you with benefits such as personal financial security and access to funding, but it also requires compliance with laws and regulations in Malaysia. One of the most concerning compliances that many entrepreneurs face is taxes as required by the Inland Revenue Board (LHDN)<\/a> and the Royal Malaysian Customs Department (RMCD)<\/a>. Understanding each company tax requirement can put you at ease on this matter so that you put more focus on growing your business.<\/p>\n\n\n\n

1. Corporate tax<\/h2>\n\n\n\n
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Corporate tax<\/a> is governed under the Income Tax Act 1967<\/a>, which applies to all companies registered in Malaysia for chargeable income derived from Malaysia including business profits, dividends, interests, rents, royalties, premiums and other income.<\/p>\n\n\n\n

Tax rates of corporate tax (as of Year of Assessment 2021)<\/h3>\n\n\n\n
\n\n\n\n\n\n\n\n
Paid-up capital of RM2.5 million or less<\/strong><\/td>\nRate<\/strong><\/td>\n<\/tr>\n
On the first RM 600,000 chargeable income<\/td>\n17%<\/td>\n<\/tr>\n
On subsequent chargeable income<\/td>\n24%<\/td>\n<\/tr>\n
Paid-up capital of more than RM2.5 million<\/td>\nRate<\/td>\n<\/tr>\n
Flat rate<\/td>\n24%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n

When to pay corporate tax?<\/h3>\n\n\n\n

Newly registered companies should file the estimation of tax payable<\/a> within 3 months of operation and make monthly instalments starting from the 6th month of the assessment year by the 15th of each month. After the assessment year has ended, a company is required to file its tax to the LHDN through the e-filling portal<\/a> within 7 months. If the actual tax liability is greater than the taxes paid based on estimation, the balance of tax payable has to be paid. On the other hand, you can apply for a refund if the actual tax liability is lower than the taxes paid.<\/p>\n\n\n\n

2. Withholding tax<\/h2>\n\n\n\n
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Withholding tax is applicable only if your company is paying a non-resident individual or company (known as the payee) for their services where a certain percentage of the payment is deducted and paid as their income taxes to the LHDN. Each payment type<\/a> has a different tax rate according to Section 107A and Section 109 of the Income Tax Act 1967. Under the Double Taxation Agreements (DTA)<\/a>, you may apply for a refund of overpaid withholding tax.<\/p>\n\n\n\n

Tax rates of withholding tax<\/h3>\n\n\n\n
Payment Type<\/td>Rate<\/td><\/tr>
Contract payment for services done in Malaysia<\/td>10% , 3%<\/td><\/tr>
Interest<\/td>15%<\/td><\/tr>
Interest paid by approved financial institutions<\/td>5%<\/td><\/tr>
Royalty<\/td>10%<\/td><\/tr>
Special classes of income: Technical fees, payment for services, or payment for use of moveable property<\/td>10%<\/td><\/tr>
Income of non-resident public entertainers<\/td>15%<\/td><\/tr>
Real Estate Investment Trust<\/td>10%, 25%<\/td><\/tr>
Family Fund \/ Takaful Family Fund \/ Dana Am<\/td>8% , 25%<\/td><\/tr>
Others<\/td>10%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
\n\n\n\n\n\n\n\n\n\n\n\n\n
Payment Type<\/strong><\/td>\nRate<\/strong><\/td>\n<\/tr>\n
Contract payment for services done in Malaysia<\/td>\n10% , 3%<\/td>\n<\/tr>\n
Interest<\/td>\n15%<\/td>\n<\/tr>\n
Interest paid by approved financial institutions<\/td>\n5%<\/td>\n<\/tr>\n
Royalty<\/td>\n10%<\/td>\n<\/tr>\n
Special classes of income: Technical fees, payment for services, or payment for use of moveable property<\/td>\n10%<\/td>\n<\/tr>\n
Income of non-resident public entertainers<\/td>\n15%<\/td>\n<\/tr>\n
Real Estate Investment Trust<\/td>\n10% , 25%<\/td>\n<\/tr>\n
Family Fund \/ Takaful Family Fund \/ Dana Am<\/td>\n8% , 25%<\/td>\n<\/tr>\n
Others<\/td>\n10%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n

When should the tax be paid?<\/h3>\n\n\n\n

The withholding tax should be paid within 1 month from the date of payment to the non-resident payee.<\/p>\n\n\n\n

3. Payroll tax<\/h2>\n\n\n\n
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As part of the employer's responsibility, a company with employees will need to retain a percentage of the employees' remuneration including salary, commission, bonus, incentives, etc. and pay as Monthly Tax Deduction (MTD) to LHDN on behalf of employees who are taxable<\/a>. This deduction, along with EPF, SOCSO, and EIS<\/a>, will be stated in the employees' payslip as PCB (potongan cukai bulanan). The payroll tax can be deducted if the employee is paying Zakat, a payment made under the Islamic law for charitable and religious purposes.<\/p>\n\n\n\n

Tax rate of payroll tax<\/h3>\n\n\n\n

The calculation of PCB<\/a> can be done based on the MTD schedule<\/a> or through the Computerised Calculation Method on the e-CP39 portal<\/a>. The amount of PCB required from each employee varies according to the category they fall in and also the amount of remuneration they receive each month.<\/p>\n\n\n\n

When to pay payroll tax?<\/h3>\n\n\n\n

PCB should be paid to LHDN by the 15th of each month, for the remuneration issued for the previous month.<\/p>\n\n\n\n

4. Stamp duty<\/h2>\n\n\n\n

 <\/h2>\n\n\n\n
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Your company is required to pay for Stamp Duty when instruments are involved, which are written legal, commercial, and financial documents. Examples of taxable instruments are partnership agreement and mortgage agreement. There are two types of Stamp Duty<\/a>, one with a fixed rate regardless of the amount stated in the instrument, the other which varies according to the nature of the instrument and the value stipulated. Besides some situations where the Stamp Duty is exempted, you may apply for Stamp Duty relief<\/a> under certain cases.<\/p>\n\n\n\n

Tax rate of stamp duty<\/h3>\n\n\n\n

All information regarding taxable instruments and exemptions are stated in the Stamp Act 1949<\/a>. Instruments that are chargeable for Stamp Duty are listed in the First Schedule together with the rates while the persons liable to pay the Stamp Duty are listed in the Third Schedule.<\/p>\n\n\n\n

When to pay stamp duty?<\/h3>\n\n\n\n

The instrument should be stamped within 30 days of the execution of the instrument. The following are ways to pay stamp duty<\/a>:<\/p>\n\n\n\n