Corporate Tax Rate In Malaysia: Everything You Need To Know

Embarking on a business venture in Malaysia opens up a realm of possibilities, not to mention a diverse market to tap into. However, to navigate through the financial landscape efficiently, understanding the corporate tax structure is fundamental. In this article, we delve into Malaysia's corporate tax rate, the essentials of filing corporate tax, and who is obliged to pay, aiding you in making well-informed business decisions.

What is the corporate tax rate in Malaysia?

Corporate income tax, also known as company tax, is a direct tax imposed on the profits earned by companies operating in Malaysia.

Corporate income tax in Malaysia is a direct levy by the government, applicable to both resident and non-resident companies deriving income from the country. The corporate income tax rate in Malaysia is contingent upon the specific category of the company.

Important steps to file corporate tax in Malaysia

Step 1: Submitting estimated tax payable

Companies have the option to submit their estimated tax payable either through e-filing (e-CP204) or directly to the LHDNM Processing Centre.

If you are a newcomer, then the estimated corporate income tax in Malaysia should be filed within three months from the inception of operations.

On the other hand, existing companies are expected to file the estimated tax payable 30 days before the commencement of a new year.

Step 2: Remitting estimated tax

Corporate entities are mandated to remit the estimated tax via CP207, with the deadline being on or before the 10th of each month.

Newly established companies begin paying this tax starting from the sixth month of the basis period. Whereas, existing companies initiate this tax payment from the second month of the basis period.

Step 3: Submission of Form C

Following the payment of the estimated tax, companies are required to submit Form C. This submission can be carried out either through e-filing (e-C) or at the LHDNM Processing Centre.

Special note for the newly registered companies:

Newly registered companies in Malaysia need to adhere to certain stipulations concerning tax filing and payment. Within the initial three months post-registration, these entities are mandated to provide an estimate of the tax due. Furthermore, commencing from the 6th month of the assessment year, monthly tax instalments are required to be remitted by the 15th of each month.

Upon conclusion of the assessment year, every company is obligated to file its tax return via the e-filing portal. In instances where the payable tax exceeds the earlier estimated amount, the company must settle the outstanding balance. On the flip side, should the actual tax figure fall below the estimated amount, the company is entitled to request a tax refund.

It's crucial for companies to meticulously adhere to these tax filing and payment mandates to ensure alignment with Malaysian tax regulations. Engaging tax professionals or liaising with accounting firms well-versed in Malaysian tax laws can offer invaluable assistance, ensuring precise compliance with these stipulations.

Corporate tax rates in Malaysia

This table simplifies the varying corporate tax rates for different types of companies in Malaysia.

Who needs to pay the corporate tax in Malaysia?

All companies operating in Malaysia, resident or non-resident, are required to pay corporate tax on income earned or received from Malaysia.

Conclusion

In conclusion, understanding Malaysia's corporate tax rate is crucial for both resident and non-resident companies operating in the country. Adhering to the tax laws and regulations, including the timely filing and payment of taxes, is essential for ensuring compliance and fostering a conducive business environment in Malaysia.

Utilising platforms like ClearTax can significantly streamline the process of handling your tax matters, ensuring you remain on the right side of the law. For more insights on e-invoicing and managing your business finances, explore ClearTax’s range of services.