Corporate Income Tax in Malaysia

Corporate tax rates and base

• General framework — Companies are taxed under a single-tier system on income accruing in or derived from Malaysia. Resident SMEs enjoy reduced rates on the first tranches of chargeable income.
• Standard corporate income tax rate — 24% % (Income Tax Act 1967, Schedule 1)
• Resident SME rate — first RM150,000 of chargeable income — 15% % (Income Tax Act 1967, Schedule 1)
• Resident SME rate — RM150,001 to RM600,000 of chargeable income — 17% % (Income Tax Act 1967, Schedule 1)
• Resident SME rate — chargeable income above RM600,000 — 24% % (Income Tax Act 1967, Schedule 1)
• SME eligibility criteria — Resident company with paid-up ordinary share capital of RM2.5 million or less at the start of the basis period AND gross business income not exceeding RM50 million (plus shareholding/group conditions) (Income Tax Act 1967, Schedule 1 / Paragraph 2A-2D)
• Tax base — Income accruing in or derived from Malaysia (territorial); foreign-source income generally exempt unless specifically taxable (Income Tax Act 1967, Section 3)
• Dividend taxation (corporate level) — Single-tier system — dividends paid by Malaysian companies are not taxed again in the shareholder's hands and carry no withholding tax (Income Tax Act 1967)
• Domestic top-up tax (QDMTT) under Pillar Two — 15% minimum effective rate for in-scope multinational groups, financial years on or after 1 January 2025 % (Income Tax Act 1967 (Finance Act / Multinational Top-up Tax provisions))

Withholding tax and corporate filing

• General framework — Payments to non-residents attract withholding tax at statutory rates, often reduced under double tax agreements. Companies pay tax in monthly instalments based on an estimate and file annually.
• Withholding tax on dividends paid to non-residents — 0% (no withholding tax under the single-tier system) % (Income Tax Act 1967)
• Withholding tax on interest paid to non-residents — 15% (may be reduced by treaty) % (Income Tax Act 1967, Section 109)
• Withholding tax on royalties paid to non-residents — 10% (may be reduced by treaty) % (Income Tax Act 1967, Section 109)
• Withholding tax on technical/service fees to non-residents (Section 4A) — 10% (may be reduced by treaty) % (approx — confirm scope of Section 4A income) (Income Tax Act 1967, Section 109B)
• Estimate of tax payable (Form CP204) — Companies must submit an estimate of tax payable not later than 30 days before the start of the basis period (Income Tax Act 1967, Section 107C)
• Payment of estimated tax — Paid in monthly instalments (generally 12) by the 15th of each month during the basis period (Income Tax Act 1967, Section 107C)
• Annual return filing (Form C) — Within 7 months after the close of the financial year-end (via e-Filing) (Income Tax Act 1967, Section 77A)