Tag: tax incentives in malaysia

Blog

How to Register Income Tax & File E-Filing with LHDN 2024

Post author By admin
Post date December 5, 2023

How to Register Income Tax & File E-Filing with LHDN 2024

Today, understanding and overcoming the complexity of the income tax system is not just a legal obligation but a vital contribution to the nation’s development.

This comprehensive guide aims to provide a detailed, step-by-step walkthrough for individuals and businesses on registering income tax and effectively utilizing the e-Filing system with the Inland Revenue Board of Malaysia (LHDN) in 2024.

About Malaysian Income Tax

At the core of financial responsibility lies the need to comprehend Malaysia’s income tax system. This understanding is highly important for individuals and businesses, ensuring compliance with regulations and actively contributing to the economic growth of the nation.

From individual taxpayers to thriving enterprises, adherence to tax regulations is a basic pillar of financial stewardship.

Registering for Income Tax

Who Needs to Register?

The obligation to register for income tax includes a diverse range of individuals and entities. This includes single individuals with annual earnings surpassing RM34,001, married individuals with non-working spouses earning above RM46,001, business operators, and those involved in property transactions. The criteria are coherent, covering a spectrum of financial activities.

Online and Manual Registration

Efficiency in the registration process is key, and Malaysia’s tax system provides two primary avenues for this – online and manual registration. The online route, facilitated through the MyTax system, offers a swift process. Necessary documents such as identification cards or passports are required for this process. Alternatively, manual registration at an Inland Revenue Board of Malaysia (IRBM) branch allows for a traditional, in-person approach to document submission.

Activating MyTax HASiL PIN

Post-registration, the acquisition of the MyTax HASiL PIN becomes important. This PIN serves as the gateway to seamless access to the e-Filing system. Whether obtained online or from an IRBM branch, this step ensures a streamlined entry into the e-Filing process.

Creating Your e-Filing Password

The subsequent step involves registering the 16-digit PIN in MyTax under the First Time Login menu. Successful creation of a password marks the completion of the activation process, ensuring secure access to the e-Filing system. This security measure is important in safeguarding sensitive financial information.

Filing Income Tax with LHDN

Filing Deadlines

A basic aspect of the income tax process is understanding and adhering to filing deadlines. For residents without business (Form BE), the deadline is set at April 30, with an e-Filing extension provided until May 15. Business owners using Form B have a slightly extended deadline of June 30, with the e-Filing deadline further extended to July 15. Timely filing not only prevents overdue income tax but also significantly contributes to the nation’s development.

Benefits of Timely Filing

Timeliness in filing is not merely about avoiding penalties; it goes hand in hand with national development. By adhering to the specified deadlines, individuals and businesses not only fulfill their financial obligations but also position themselves for various tax reliefs. These reliefs cover a broad spectrum, including those related to medical and health insurance, providing additional incentives for compliance.

Understanding Tax Booklet Filing Dates

Key Dates for Various Taxpayers

Each category of taxpayers has its unique set of deadlines. Individuals filing Form BE face a deadline of April 30, with an e-Filing extension until May 15. On the other hand, business owners using Form B must complete their filing by June 30, with the e-Filing deadline further extended to July 15. The diversity in deadlines accommodates the varied financial activities of taxpayers.

Things to Know During Tax Season

Filing for the First Time

For individuals filing for the first time, understanding the applicable tax form and its associated deadlines is important. Form BE, designed for residents without business income, has a deadline of April 30, with an e-Filing extension available until May 15. Business owners utilizing Form B encounter a deadline of June 30, with e-Filing permitted until July 15. Getting started with initial filing is simplified when armed with knowledge and a clear understanding of the specific requirements.

Mandatory EA Form Issuance

Employers play an important role in the income tax process. They are mandated to issue EA forms to present and former employees by February 28 of the following year. This stipulation ensures that employees have the necessary documentation for their tax filings. For individuals with multiple employers during a tax year, proactive communication with each employer is necessary to secure separate EA forms.

Taxability of Benefits

Understanding the taxability of benefits is a nuanced aspect of the income tax process. Benefits can be broadly categorized into benefits-in-kind and perquisites. While certain exemptions exist, it’s important to note that directors or employees with significant control over their employers may not be eligible for these exemptions. A detailed understanding of these nuances ensures accurate and compliant tax filings.

All in All

In terms of Malaysia’s income tax system, a proactive approach is not just recommended; it’s necessary. Adhering to deadlines, comprehending applicable tax forms, and leveraging available exemptions contribute to a seamless tax season.

However, the complexity of tax regulations may warrant additional assistance. Seeking professional guidance from accounting services in Malaysia can streamline the process, ensuring not only compliance with tax incentives but also a clear understanding of the evolving tax scenario.

This proactive engagement is not just an individual or business obligation; it aligns with the broader economic goals of the country. Malaysia’s advancement requires active participation in its tax framework, turning tax compliance from a legal requirement into a strategic move for personal and national growth.

As Malaysia continues on its trajectory of economic development, understanding and actively participating in its tax ecosystem become integral components of responsible citizenship and financial stewardship.

Tags tax incentives in malaysia

Blog

How to File Taxes for Freelancers

Post author By admin
Post date June 24, 2022

How to File Taxes for Freelancers

The freelancing market in Malaysia has witnessed tremendous expansion over the last few years, with many relying on modern tools and technology to make money through social media and freelancing platforms.

In addition, the COVID-19 pandemic has also encouraged more people to focus on personal development and look for ways to make money online.

If you are working as a freelancer, you should be familiar with the tax incentives in Malaysia and how you can properly file taxes to avoid legal issues.

First of all, let’s start with some basics:

Definition of a Freelancer

The World Bank defines self-employed persons as someone whose income relies directly on the profits produced — which appropriately represents freelancers and gig workers as well.

This term is also mirrored in various government efforts, where this group is provided comparable benefits as self-employed persons (such as the Self-Employment Social Security Scheme).

It also includes gig economy employees, such as e-hailing drivers, delivery riders, and merchants on e-commerce platforms. Therefore, it is clear that freelancer is a broad term that includes a variety of jobs in different sectors.

Is it necessary to file your taxes?

It is a common misconception among many freelancers that they do not have to file taxes when they are earning online.

However, if your annual income is greater than RM34,000 after the deduction of EPF contributions, you are legally obligated to file your taxes like any other individual.

This threshold is set by the tax authorities in all conditions, so the source of your income does not matter.

Whether you are working for a company or as a freelancer, you have to file your taxes after achieving a certain level of income. Professional accounting firms in Malaysia can help you in filing your taxes.

Filing Taxes as an Employee and as a Freelancer

There are no obvious distinctions between workers and freelancers. Both of them can also utilize the same form according to the company’s registration and license status.

However, you should keep some major differences in mind. For example, workers will get a document called an EA form outlining their yearly pay earnings, as well as annual year-round EPF and SOCSO contributions.

The essential summary of revenue will become beneficial when filling out your return form. On the other hand, freelancers have to figure out their revenues by tabulating their profits via invoices and costs.

Employees might also be under the Regular Tax Deduction (MTD) program, which their employer calculates for them and makes tax deductions.

When the time comes to submit taxes, every employee may pay only a modest fee owing to the MTD or even claim a refund if they have overpaid.

Besides that, workers and full-time freelancers would have to go through the same procedure to submit taxes.

Tax Incentives in Malaysia

If you are a freelancer, most of your earnings will be taxable, but there are certainly some exemptions. Like the employees, freelancers can apply for various reliefs, deductions, exemptions, and tax incentives in Malaysia. Some of these incentives are:

Exemption of up to RM10,000 if you publish artistic work and record tapes.
Freelancers who translate books and literary work can get up to RM12,000 exemption.
Commercialized research findings can get a 50% exemption of the statutory income.
Publishing books, musical compositions, and paintings can get you up to RM20,000 exemption.

Registering a Business

If you want to get more tax incentives in Malaysia while working as a freelancer, you should consider registering your business.

You can easily complete the registration process with Suruhanjaya Syarikat Malaysia (SSM) or consult professional accounting services in Malaysia to do it.

You should register your business, even if you are merely freelancing as a side project because SSM offers up a range of tax deductions intended exclusively for companies.

For instance, you may be allowed to claim some expenditures as the company running costs – which you cannot do as a non-business taxpayer.

In Summary

Be careful to perform your accounting properly and exactly; otherwise, an inaccurate reporting of your taxes (wrong revenue and incorrect tax amount paid) may lead you to penalties and an audit request from LHDN, which will result in significant penalties.

It is also feasible to create a business bank account. In this manner, you can segregate your personal funds and company finances, making your bookkeeping, tax filing, and accounting much simpler, even if you are only working as a freelancer.

Overall, you can make this entire process of filing taxes as a freelancer by relying on the accounting services of an accounting firm in Malaysia and also get the relevant tax incentives.

Tags tax incentives in malaysia

Blog

What Are Malaysia Tax Incentives and How Do They Work?

Post author By admin
Post date May 5, 2022

Single Word Taxes On Wooden Block Over Stacked Coins

What Are Malaysia Tax Incentives and How Do They Work?

There are numerous types of tax incentives in Malaysia that are offered in terms of tax exemption, allowances, and deductions. Typically, such tax incentives can be availed by tax resident companies.

The purpose of offering different types of tax incentives to various businesses is to encourage more people to establish their businesses in Malaysia and enjoy the benefits from such incentives.

Generally, accounting firms in Malaysia can help businesses and individuals apply for the relevant tax incentives as such companies are familiar with the incentives and exemptions available as per the law.

Following are the major types of tax incentives in Malaysia that you should know about while running a business:

Understanding Malaysia Tax Incentives

Malaysia offers a variety of tax incentives aimed at encouraging investment, innovation, and growth. Here, we break down the key incentives, eligibility criteria, and benefits.

Types of Tax Incentives

Pioneer Status

Eligibility: Companies engaged in promoted activities/products.
Benefits: 70% exemption on statutory income for 5 years

Investment Tax Allowance (ITA)

Eligibility: Companies investing in new projects, expansions, or diversification.
Benefits: 60% allowance on qualifying capital expenditure for 5 years.

Reinvestment Allowance (RA)

Eligibility: Companies involved in manufacturing/agriculture that reinvest in modernizing/expanding operations.
Benefits: 60% allowance on qualifying capital expenditure for 15 consecutive years.

Accelerated Capital Allowance (ACA)

Eligibility: Companies investing in automation equipment.
Benefits: 100% allowance on the first RM2 million qualifying expenditure.

Principal Hub Incentive

Eligibility: Companies establishing regional/global operations in Malaysia.
Benefits: 10-year tax exemption.

Source: Malaysia – Corporate – Tax credits and incentives

Comparison Of Malaysia Tax Incentives

Incentive	Eligibility	Benefits
Pioneer Status	Promoted activities/products	70% exemption for 5 years
Investment Tax Allowance	New projects, expansions, diversification	60% allowance for 5 years
Reinvestment Allowance	Modernizing/expanding operations	60% allowance for 15 years
Accelerated Capital Allowance	Automation equipment	100% on first RM2 million expenditure
Principal Hub Incentive	Regional/global operations in Malaysia	10-year tax exemption

Pioneer Status and Investment Tax Allowance (ITA)

Organizations involved in promotional activities and manufacturing promoted products for 5 to 10 years are given pioneer status (PS) in the form of tax exemption. The investment tax allowance (ITA) is an alternative to PS.

ITA is given on the basis of the capital expenditure spent on industrial buildings and machinery being used for promoted activities or during the production of promoted products.

Special Incentive Scheme

Under the special incentive scheme, organizations formed in Malaysia that generate income from an “authorized business” as determined by the Minister of Finance can enjoy significant tax exemptions.

These companies can provide quality tax exemptions up to as high as 70% of the statutory income.

Allowances for Manufacturing Industry

Malaysia offers various types of allowances for the manufacturing industry. Companies operating in the manufacturing or agriculture industry can apply for the allowance for increased export.

Furthermore, organizations operating in industries like communication and transportation are also eligible for tax incentives under the approved services project (ASP).

Food Production

A company with an approved license for food production that has invested in its subsidiary can apply for a tax deduction on the basis of the amount invested by the parent company.

Generally, the Ministry of Finance is responsible for approving the subsidiary companies for the food production industry. Such companies can be eligible for even 100% tax exemption for up to 10 years.

Professional accounting services in Malaysia can typically handle such procedures easily and guide to apply for applicable tax incentives.

Reinvestment Allowance

Reinvestment allowance is another popular tax incentive in Malaysia that facilitates the companies operating in Malaysia for more than 36 months and spending money on the QCE of the manufacturing plant.

The goal of this scheme is to help companies expand, modernize, and automate the traditional process of a manufacturing plant.

Incentives for Information and Communications Technology

The amount of money involved in the development of an e-commerce website is exempted with a yearly exemption of 20% for five years.

Similarly, offshore trading companies operated by the non-residents of Malaysia can also apply for tax exemption if they are using a website based in Malaysia to sell foreign products.

A wide range of ICT companies can also apply for tax exemptions and incentives under the multimedia super corridor (MSC). Companies with MSC status involved in high-capital intensive dealings can apply for tax exemption on statutory income for 10 years.

Moreover, if the ICT companies choose to shift to cybercities, they can be eligible for a 100% tax exemption for ten years on statutory income.

On the other hand, if the MSC companies are not located within the designated region, they can still apply for a 75% tax exemption for five years.

Many different types of tax incentives are available for ICT companies. It becomes easier to understand and apply for these incentives by using the services of accounting firms in Malaysia.

Medical Tourism

If an organization wants to modernize or grow its private healthcare facility, it can apply for tax exemption. However, the healthcare facility must benefit at least 5% of the healthcare travelers from all patients. In this case, it can apply for an exemption of 100% of QCE for five years.

Final Takeaway

The Malaysian government is taking several other steps to improve and expand the structure of tax incentives to develop a transparent, competitive, and attractive business environment in the country.

Special focus is being placed on high technology activities and industries to attract more companies.

Since a wide range of tax incentives are available in Malaysia, it is always a good idea to rely on professionals like an accounting firm in Malaysia to get reliable accounting services.

Tags tax incentives in malaysia

Blog

How Can eCommerce Business Prepare for the End of a Tax Year?

Post author By admin
Post date February 7, 2022

How Can eCommerce Business Prepare for the End of a Tax Year?

eCommerce is rapidly evolving, continuously changing due to the variety of companies being established on a regular basis. Online businesses are also enjoying the massive growth period, especially due to the COVID-19 pandemic.

However, it is quite understandable that as an eCommerce business grows, its finance and sales also get more complicated.

Therefore, it is important for the business owners of eCommerce stores to prepare for the end of a tax year and have a proper accounting system in place to file taxes on time and claim the tax incentives in Malaysia.

In this post, you will get the top 5 tips to follow for the end of a tax year.

1. Maintain Comprehensive Financial Records

The most crucial component of accounting is to maintain track of all your company’s transactions. Any time money enters or leaves your organization, it is referred to as a transaction. These transactions are connected to sales in terms of accounting.

A transaction must be documented whenever a consumer purchases a product from your eCommerce website or application. Any time your organization buys anything it plans to sell online, it’s a transaction that must be documented.

If you are using the professional services of an accounting firm in Malaysia, you should have no issue maintaining comprehensive financial statements and records.

Generally, a company must create and maintain four types of financial statements: income statement, balance sheet, cash flow statement, and shareholder’s equity statement.

2. Inventory Management

It is important for both retail and eCommerce businesses to keep track of their inventory and monitor the items available in stock.

This facilitates the smooth working of the business and also allows you to recheck the financial statements in case of any discrepancies. Moreover, inventory management is also vital for budgeting purposes.

3. Categorize Transactions

The standard procedure in eCommerce accounting is transaction classification. Every transaction on your cash flow statement should be classified as either a cost or an income.

Most accounting software will sort the transactions for you, so all you have to do is evaluate them and assign the appropriate categories like sale returns and marketing.

Accounting firms in Malaysia have years of experience in dealing with various types of companies, including eCommerce businesses. Therefore, you should rely on such firms to make sure the best accounting standards are being implemented in your business.

4. Importance of Seasonal Budgeting

Bookkeeping is more of a day-to-day task, while accounting’s purpose is to increase your company’s long-term profitability. Cutting expenses is one of the most effective strategies to increase your company’s profitability.

Financial statements, particularly the income statement, are extremely useful in identifying areas where you can cut down costs to increase profitability. The bulk of your company’s costs, such as the cost of goods sold and operational expenses, will be included on your income statement.

Examine these records to see where the most money is being spent. Consider how you can cut these expenditures as much as possible. Can you find lower-cost items to sell? Is it possible to find a less-priced office space to rent?

You may not be able to drastically reduce your expenses, but cutting even a little amount of money in different parts of the business can help you save a huge amount in the long run.

5. Implement Latest Accounting Standards

You must ensure that your books are up to date to submit your taxes. A clean set of records provides a clear picture of your company’s revenue and spending. In the event of an audit, they’re also your first line of defense.

It is important to follow global accounting standards to ensure maximum compliance.

However, business owners already have a lot of responsibilities, so it is better to rely on an accounting firm in Malaysia that can keep up with the changing regulations and also help you claim tax incentives in Malaysia.

When it comes to keeping your accounts up to date, select the approach that works best for you depending on how much time you have to devote to accounting, your budget, and your level of confidence in maintaining your own records.

In a Nutshell

If you follow the tips and tricks discussed in this post, it will become easier for you to prepare for the end of a tax year, whether you have an eCommerce business or a traditional brick-and-mortar store.

If you think that you don’t have the time and energy to focus on these measures, hire the services of a professional accounting firm in Malaysia and let the experts handle the accounting procedures.

Tags tax incentives in malaysia

Blog

Tax Relief and Exemption for Businesses in 2022

Post author By admin
Post date December 30, 2021

Tax Relief and Exemption for Businesses in 2022

Malaysia has always been known for providing a variety of tax incentives to different types of businesses.

Similarly, in its 2022 budget, Malaysia has announced many incentives to support companies and boost their post-pandemic growth. The overall worth of the 2022 budget is around 333.2 billion ringgits.

According to official sources, the budget’s goal is to build resilience in the economic sector and promote economic recovery to ensure companies can get back to their optimum working conditions after the pandemic.

Malaysia’s finance minister has also announced that the government is expecting the economy to grow between 5.5% to 6.5% in 2022.

Following are the major tax incentives in Malaysia as part of the 2022 budget.

1. Extension in SST Exemption

The vehicles sales tax exemption or SST was scheduled to end on 31st December 2021. However, according to the new measures, it has been extended to 30th June 2022.

100% exemption is given to the locally assembled vehicles, while fully imported vehicles will get 50% exemption. Furthermore, the local electric vehicle industry is also getting a 100% exemption to promote the development of electric vehicles.

2. EPF Contribution

The finance minister has announced that the Employee Provident Fund will increase the period to minimize the EPF contribution rate from 11% to 9% till June 2022.

This measure aims to increase the amount of money given to the people.

RM2 billion has been allocated for this highly popular initiative.

3. Real Property Gains Tax

According to the 2022 Budget, real property gain tax will not be imposed on property disposals by citizens, foreigners, or permanent residents from the sixth year onwards.

As a result, the RPGT rate for property disposal in the 6th year is significantly reduced from 5% and 10% to 0% from 1st January 2022.

The purpose of this measure is to support the real estate industry and give it much-needed support after the COVID-19 pandemic.

It is highly expected that the new tax incentives in Malaysia will play an integral role in the economic recovery and help overall economic conditions to improve for the people.

4. Income Tax Reliefs

The new budget also provides the following incentives to people in the next few years.

Significant extension of the special individual income tax relief of up to RM 2,500 on buying mobiles, laptops, and tablets till 31st December 2022.
The scope of individual income tax relief for health screening expenditure is increased to cover the expenses of mental health consulting services.
Individuals can also claim an extension in the individual income tax relief of up to RM3,000 for the payment of kindergarten charges until 2023.
Special individual income tax relief for local tourism expenses up to RM1,000 has also been extended till 2022.
People who purchase and install electric vehicle charging facilities can claim income tax relief of up to RM2,500.

5. PTPTN Payments

The government is offering a discount on the PTPTN payments from 1st November 2021 to 31st April 2022 for the following conditions:

15% off for those individuals who want to make a full settlement.
12% off for those who want to settle at least 50% of the loan balance.
10% off for the individuals who are making repayment via scheduled salary deduction.

According to the latest guidelines, borrowers can apply online to make the payment via salary deduction.

The discounts provided by the government will be reflected in the borrower’s loan account at the end of each month. These statements can be reviewed from the 7th of the next month.

6. Tax Incentives for SMEs

The Malaysian government has announced several tax incentives for businesses and SMEs. Companies should consider getting in touch with a professional accounting firm in Malaysia to get familiar with these incentives and apply for them.

For instance, the government is offering a total of RM40 billion under the Semarak Niaga program through direct loans, regular financing, and equity injections. Similarly, there are many micro-credit schemes offered by authorities like Bank Negara Malaysia and Bank Rakyat.

All In All

These initiatives show that you can apply for many different types of tax incentives in Malaysia.

It is highly expected that the government will start offering even more incentives in the future to support businesses and boost the overall economic recovery.

It is always a good idea for businesses to rely on professional accounting firms in Malaysia to get help from professionals in applying for relevant tax incentives and successfully obtain them.

Tags tax incentives in malaysia

Blog

How to Attain a Balanced Tax Reform in Malaysia

Post author By admin
Post date November 16, 2021
No Comments on How to Attain a Balanced Tax Reform in Malaysia

How to Attain a Balanced Tax Reform in Malaysia

Many different factors go into attaining a reliable and efficient balance in tax reforms in Malaysia. For example, professional accounting firms and tax incentives in Malaysia are also helping the authorities to bring more balance in tax rules and regulations.

The best way to achieve this goal is to make such strategies that can support the government revenues without compromising the progress of the private sector.

The (CME) suggests the following top five techniques to achieve balanced tax reform in Malaysia:

1. Reduce Income Tax

According to experts and business analysts, private investments are the most important engine of long-term growth. Hence, it is being proposed that the government encourage more investment by providing an income tax reduction.

However, this kind of change has to be implemented on both direct and indirect taxes. It is the responsibility of the authorities to ensure compliance with the changing standards.

2. Introduce GST

The income tax cut should be counterbalanced by a consumption tax. The justification for a consumption tax is mostly based on the prospect of encouraging household savings in a country where household debt is extremely high.

The return of the GST may provide an opportunity to explore the prospect of more significant potential to reduce. GST encourages local governments to take a greater role in tax collection so that they can have more direct access to funds that can be used to support the economy.

3. Special Schemes for Small Business

It is extremely important to support startups and small businesses. Professional accounting services in Malaysia allow such companies to qualify for all of the available tax incentives in Malaysia so that micro businesses also have the opportunity to flourish and contribute towards the betterment of the country.

4. Changes in Tax Regulations due to the COVID-19 Pandemic

There has been a significant increase in the budget deficit as a result of the resources needed to deal with the COVID-19 pandemic.

Now, economists are suggesting a special purpose tax (SPT) of 5% on taxable earnings of businesses over a certain level in Malaysia. For the assessment years 2021 and 2022, such a tax should be applied for two years and then abolished to support the companies.

It is important for the authorities to explicitly specify the time limit to ensure the businesses are not discouraged by such new taxes. It will give rise to a new social agreement between the government and the people.

\As a result, people can expect better services and products to fight the pandemic, and companies can keep working without any future lockdowns.

5. Progressive Capital Gain Tax

Experts are also proposing a progressive capital gains tax because the public sector has a great responsibility to contribute towards the healthy growth of the economy. This kind of tax will be useful in facilitating the economic system to grow and have sustainable growth in the long term.

The idea of such a corridor pre-supposes that the political sphere can take the appropriate measures that can effectively and opportunely tame and dominate those forces in a capitalistic system which continuously tries to go through the roof and risks exiting the corridor towards an excessive growth path.

At the same time, authorities must ensure that the economy does not stray from the path and is not forced to deal with economic instability. This tax might act as a self-correcting mechanism for investing behaviour. The proposed tax will result in a situation in which the smaller the return, the lower the tax rate.

It is common knowledge that low-return investments are associated with low-risk. Thus, such a tax would encourage cautious behaviour among the investors.

Overall, companies can expect to see a move away from highly speculative ventures that promise a high rate of return since some investors will lose interest as a result of the higher tax burden.

If the economy rises over the corridor, fewer individuals will join the bandwagon, and the hazardous bubble will grow at a slower rate. This would allow the system to slow down and adapt to the changing economic conditions.

On a Final Note

These strategies will definitely be useful in bringing a much-needed balanced tax reform in Malaysia. Overall, it is a very complex issue as it involves various kinds of financial constraints, and the authorities must consider the situation of all kinds of businesses before making any drastic changes.

The good thing is that professional accounting services in Malaysia have years of experience in dealing with critical business functions, so they can provide their useful advice and services to the authorities and specific companies as well.

Tags tax incentives in malaysia

Blog

5 Company Taxes In Malaysia You Need To Be Aware Of

Post author By admin
Post date September 1, 2021
No Comments on 5 Company Taxes In Malaysia You Need To Be Aware Of

young woman wearing a black suit,using the phone in the office

Five Company Taxes In Malaysia You Need To Be Aware Of

As a business owner, it is critical for you to be familiar with the various types of company taxes applicable to your business in Malaysia. Getting familiar with these types of taxes will also help you in obtaining the right kind of tax incentives in Malaysia. By engaging in a professional accounting service in Malaysia, you will be able to keep up with the changing tax regulations.

This post explains the five major company taxes in Malaysia.

1. Corporate Tax

Corporate income tax is the direct tax that businesses in Malaysia have to pay under the Income Tax Act 1967. This tax is applicable to all companies registered in Malaysia. Generally, the rate of the corporate tax is anywhere between 17% to 24% for companies that generate taxable income from sources within Malaysia.

The exact rate of the corporate tax can greatly vary from business to business and on the basis of the yearly budget. However, it is the responsibility of every company in Malaysia to submit and file the corporate tax on a yearly basis.

The taxable income in Malaysia includes business profits, interests, rents, and other sources of income. Accounting services can help businesses in evaluating these incomes and making sure the company is complying with all of the essential rules and regulations related to corporate tax.

2. Withholding Tax

Withholding tax is applicable to companies that are using the services of non-resident individuals or companies when a significant amount of payment has to be deducted and submitted as income tax.

There are certain tax incentives in Malaysia that allow you to avoid withholding tax or at least reduce it, like the double taxation agreements. Contact a professional audit firm in Malaysia to understand such incentives. Companies must pay the withholding tax within one month from the date of payment to a non-resident individual or company.

3. Payroll Tax

According to the rules and regulations in Malaysia, it is the responsibility of the employer to retain a certain percentage of the employees’ remuneration like bonuses, incentives, commission, and salaries, which should be submitted as the Monthly Tax Deduction (MTD) to the LHDN.

It is important to show this type of tax on the payslip of the employees. The payroll tax has to be paid by the 15th of each month based on the remuneration provided to the employees in the previous month.

4. Stamp Duty

It is essential to pay the stamp duty when your company is dealing with legal, commercial, and financial documents. Some of the common taxable instruments include partnership and mortgage agreements.

Generally, companies have to pay two types of stamp duty: the fixed tax rate you have to pay and the one that is dependent on the nature of the instrument. You can also rely on accounting services to get tax incentives in Malaysia.

5. Sales and Service Tax (SST)

The sales tax is a tax that is applicable to manufactured products or products that are imported to Malaysia by a taxable company. When the revenue of such a company is more than RM500,000 within the period of 12 months, the company must pay the sales tax.

However, there are several tax incentives that apply to service tax. Items such as face masks, medical and laboratory equipment, PPE, and disposal items are exempted from the service tax.

It is important that you do not confuse service charges with service tax. Service tax is the tax that is applicable on taxable services in Malaysia like accommodation, gaming, and services being provided by a taxable individual that has a total value of greater than RM500,000 in 12 months.

For the food and beverages industry, the threshold of the total value is greater than RM1,500,000 in 12 months. Since there are different rules that govern the types of SST taxes in different industries, it is better for the companies to rely on a professional accounting service and an audit firm to ensure they are able to keep up with these regulations.

In a Nutshell

These are the five most important taxes in Malaysia. In fact, companies with different business nature are required to pay different taxes. Accounting services in Malaysia help the companies in getting all of the available tax incentives and get through the process of taxation in an efficient manner.

Tags tax incentives in malaysia

Blog

Do You Need A Tax Consultant For Your Business In Malaysia?

Post author By admin
Post date September 1, 2021
No Comments on Do You Need A Tax Consultant For Your Business In Malaysia?

Do You Need A Tax Consultant For Your Business In Malaysia?

Taxation is one of the most important aspects you have to keep in mind when you are running a business. In fact, each business strategy and decision is impacted by the tax regulations in some way or another. Accounting firms in Malaysia help the companies in navigating these tax rules and regulations and ensure they comply with all applicable rules.

Engaging a professional accounting service in Malaysia can ensure companies have access to professionals who have years of experience in accounting practices and dealing with various tax policies and regulations. Such services can ultimately help companies in optimizing efficiency and profitability.

This post aims to help businesses in Malaysia in getting familiar with the benefits of hiring a tax consultant. Let’s start with some basics:

What is a Tax Consultant?

A tax consultant is a professional who deals with the tax rules and regulations, along with financial-related counselling for various types of business. Getting the services of a tax consultant is important to obtain reliable advice on tax-related matters.

Moreover, tax consultants also have the up-to-date knowledge you will need to keep up with the evolving tax requirements at local, federal, and state levels. Hiring a tax consultant ensures companies enjoy all the available tax incentives in Malaysia and comply with all tax-related regulations.

Professional accounting services from a qualified tax consultant in Malaysia can help companies in the following matters:

1. Corporate Income Tax Compliance

There have been some significant changes in terms of the rules and regulations related to corporate tax in Malaysia. If you want to keep up with these regulations and ensure maximum compliance, you should hire a qualified tax consultant who is familiar with the working procedures of the Malaysian Inland Revenue Board to ensure the company is implementing the best taxation practices.

2. Cross-Border Tax

The rules regarding cross-border taxation in Malaysia have become quite complex and strict in the last few years because more and more companies are now dealing with cross-border transactions and trade. However, these rules can greatly vary depending on country-by-country reporting and the nature of business.

When you are running a business, it can be quite challenging to keep up with tax-related matters as you have to focus on many other factors. Therefore, it’s recommended to obtain an accounting service in Malaysia that can help you in ensuring full compliance with the cross-border tax rules.

3. Double-Taxation Agreement (DTA)

DTA is a legal contract that allows companies to avoid double taxation. Such agreements are typically signed by the cabinet ministers and hold great importance when it comes to getting different tax incentives in Malaysia.

An experienced and professional tax consultant can help businesses in Malaysia easily get the benefits of these DTAs as they are well-familiar with the relevant DTAs that might be applicable to the business. Avoiding double taxation will ultimately help companies in saving a significant amount of money.

4. Real Property Gain Tax (RPGT)

If anyone generates income from the disposal of real property in Malaysia, he or she will have to pay the RPGT. This tax is applicable to non-residents as well. However, not every company and individual has complete knowledge about these types of taxes. As a result, obtaining a professional accounting service becomes important to get through the process easily.

5. Dealing with Inherited Money

If you have inherited money, whether it is a big amount or a small one, you should use the services of a professional tax consultant before filing your taxes. Although there is no specific inherent tax in Malaysia, it is important to prepare thorough documents that declare the assets of the deceased individual. A tax consultant can help you in organizing these documents and ensure you get the inheritance without any hassle.

In a Nutshell

When engaging a professional accounting service in Malaysia, make sure that the tax consultant of your choice has sufficient experience, knowledge, skills and qualification to deal with a wide range of tax-related matters.

Similarly, companies should hire tax consultants who have experience in dealing with the relevant type of business. All of these factors play an integral role in enhancing the efficiency and reputation of the company and ensuring a smooth taxation process.

Tags accounting services malaysia, tax incentives in malaysia

Blog

Tax Penalties In Malaysia You Need To Be Aware Of

Post author By admin
Post date March 12, 2021
No Comments on Tax Penalties In Malaysia You Need To Be Aware Of

gavel judge with coin money and book bank accounts. banking money finance law.

Tax Penalties In Malaysia You Need To Be Aware Of

Filing taxes is one of the most important things that every individual and business must take care of in different countries, including Malaysia. Companies that rely on professional accounting services have no issue in meeting the deadlines and properly file taxes on time.

However, it is possible that you might have thought about not paying taxes or delaying their payment. In such situations, you can face serious legal consequences and tax penalties in Malaysia. Whether you forget to file your taxes or decide to report a lower income than the actual one, you can be held accountable for tax fraud and evasion.

The purpose of this article is to let you know about the common tax offences in Malaysia, which can result in a tax penalty.

1. Avoid Tax Filing

If your company or you as an individual is eligible to pay taxes, you must file the taxes within the deadlines; otherwise, you can face fines and even jail time. The minimum criteria are that if you make an annual income of RM34,000 after EPF deduction, you must file your taxes.

If you choose to avoid filing your taxes, you will have to pay a fine of between RM200 to RM20,000 and possibly, face jail time. It is important to make sure that you are filing your taxes before the deadline to avoid these consequences. Generally, the tax on non-business income must be filed before 30th April, and tax on business activities must be filed before 30th June.

2. Misreporting Your Income

It is illegal to misreport your income by pretending to be making a lower income than your actual income. Even if you are not misreporting your income deliberately, it is quite common that businesses end up making mistakes in their financial analysis and reporting.

You can avoid this issue by relying on an audit firm in Malaysia that is capable of fully auditing your company and generating thorough financial reports to avoid wrongful reporting.

If you try to misreport your income to pay lower taxes, you can be fined a significant amount of between RM1,000 to RM10,000. Moreover, you will likely have to pay 200% of the tax that was undercharged in the initial unlawful tax claim.

It is important to reiterate that underreporting your income is a common and easy mistake that many individuals and businesses commit because they are now familiar with the taxation laws and the types of income that are taxable.

Other than employment income, rental income, dividends, and royalties are also included in the taxable income. Therefore, you should consider hiring professional accounting services in Malaysia to avoid such issues.

3. Exaggerating Tax Relief

Getting tax incentives and relief is highly important to cut down your tax bill. It can help you in saving a significant amount of money that you can invest in other parts of your business. However, you must ensure that you are filing your tax relief for which you are qualified. If you end up overstating your tax relief, you can run into serious legal issues.

The law makes it clear that if anyone is found guilty of overstating their tax relief and cannot support their claims of getting tax relief, they can be fined RM300 to RM10,000, along with facing possible imprisonment.

Whenever you are declaring tax relief, you should maintain thorough records of the receipts or any other supporting document to avoid any issue in the future. An audit firm can also help you in filing your taxes and making sure that all of the taxes are filed within the deadline.

In a Nutshell

Other than the tax penalties above, there are numerous other situations in which you can end up getting fined or even imprisoned for tax offences. The Income Tax Act of Malaysia deals with a variety of these tax offences.

To avoid this issue, it is highly recommended that companies rely on audit firms in Malaysia because these firms have professional and experienced auditors who know about the best practices of accounting and taxation. By relying on such professional services, you will not have to worry about getting penalized.

Moreover, individuals should also hire accounting services in Malaysia to get help in calculating the taxes and filing them on time. In short, these services will help you in avoiding tax penalties and help you in filing the taxes in an efficient, reliable, and timely manner.

For more information, feel free to get in touch with us.

Tags tax incentives in malaysia

Blog

What You Need To Know About Vacancy Tax In Malaysia?

Post author By admin
Post date September 23, 2020
No Comments on What You Need To Know About Vacancy Tax In Malaysia?

Modeling wooden houses and coins and dollars placed on wooden tables,preparation concept for house model purchase and the fastest growing real estate economy,moving home or renting property via agent

Vacancy Tax In Malaysia

Even if you are familiar with the concepts of a vacancy tax in Malaysia, it is highly possible that you might have heard more about it recently because it is being extensively discussed in the news at the moment. It is associated with the oversupply of properties that have a high cost and are not selling due to their unsuitability.

Property developers and contractors build buildings to make big profits. Now the Malaysian government is proposing the imposition of a vacancy tax on the unsold buildings of these builders.

What is Vacancy Tax?

A vacancy tax is a tax that is imposed in the shape of a penalty on those properties that are left vacant for a certain period of time. The amount of the vacancy tax is calculated on the basis of the percentage of gross selling of such properties.

Importance of Vacancy Tax

The vacancy tax is being formulated by the Housing and Local Government Ministry (KPKT). It is expected to be imposed on developers who fail to sell properties in a few months during the next few years. The purpose of this tax is to minimize the existence of empty residential units in the country.

Moreover, the Ministry is also expecting that the vacancy tax will prompt developers to become more careful and responsible with their projects, especially high-rise and large-scale developments. The introduction of the vacancy tax does not need Parliament’s approval as it can be implemented without amending the Act.

Criticism of Vacancy Tax

The announcement of the vacancy tax has resulted in severe criticism. Some economic experts and leaders of the real estate industry have criticized the authorities because such a tax could discourage investors and developers from developing new structures.

In this regard, certain developers have turned to accounting and audit firms in Malaysia to assess the possible taxes they might have to pay if the vacancy tax is successfully imposed on their unsold properties.

The basic demand of the developers is that the owners of these properties should have complete freedom over various matters associated with properties and construction. There are also some serious concerns that the imposition of a vacancy tax will set a precedent of administrative interference in the internal matters of a particular industry like the property industry.

Property and legal experts have also highlighted the fact that the Local Government Act provides tax incentives to vacant properties. On the other hand, a vacancy tax would disturb future projects in Malaysia. It is seen to be an undesirable time for such a move because the country is still recovering from the impacts of COVID-19 on the economy.

Another common criticism of the vacancy tax is that it will negatively impact property markets because they will be forced to reduce the rent in markets where properties are oversupplied. Moreover, it is important to note that monitoring vacant properties all over the country is quite challenging; the implementation of the tax will be difficult.

Government Response

The Malaysian government has promised to consider all factors before imposing any kind of vacancy. Government authorities will thoroughly study the proposal of imposing a vacancy tax. Moreover, the efficiency of this tax is often defended using the fact that similar taxes are applied in Canada and Australia.

The government has also assured the developers that any such action of imposing a vacancy tax will be taken after discussions with the financial institutions like Finance Ministry, Bank Negara Malaysia and other regulatory authorities. Similarly, Kuala Lumpur City Hall is also considering the demands and complaints of the developers and issuing proper planning approvals for sustainable development in the city.

The proponents of the vacancy tax consider it to be essential because a lot of housing units are taking much more than just a year to fill. As a result, an excess of vacant residential properties is being created.

In a Nutshell

Overall, one could say that the debate about the vacancy tax is far from over. The matter is expected to continually evolve in the next few months as the government has taken up the proposal to study it extensively and assess its feasibility.

Depending on the results of such a study, a final decision will be made about whether the vacancy tax is to be imposed on property developers or not.

For more information, feel free to get in touch with us.

Tags tax incentives in malaysia