Tel No : 011-6257 8338 | Email : vca.advisory@gmail.com | Plaza 333, Jalan Pintas Penampang.
Tel No : 011-6257 8338 | Email : vca.advisory@gmail.com | Plaza 333, Jalan Pintas Penampang.
Taxpayers are supposed to calculate their tax responsibility using the tax laws, guidelines, and decisions issued by the Malaysia Inland Revenue Board (IRB) as a basis for the self-assessment system, which transfers the duty of determining tax liability from the IRB to the taxpayer. The filed tax returns will now be treated as notices of assessment being served to the taxpayer rather than being subject to a thorough examination by the IRB.
In view of the aforesaid, tax compliance has never been so crucial Corporate Tax Compliance Obligations for the specifics. A taxpayer’s reputation and brand name could be harmed, which poses a severe business risk in addition to the financial risk of paying financial fines and even having their tax liability increased if they fail to comply with income tax rules.
Companies need to concentrate more on their core skills and value-generating endeavors if they want to stay competitive. Therefore, hiring a professional tax consultant like Voo Corporate Advisory to handle corporate tax compliance and planning will be more efficient and cost-effective.
Our skilled and knowledgeable professionals at Voo Corporate Advisory can help you manage the tax compliance responsibilities that businesses must shoulder in order to reduce their burden. Furthermore, Voo Corporate Advisory will notify you of any modifications regarding taxes that could have an impact on your company. Together, we will find chances for tax planning and put into practice the tax methods that will best serve your company.
Included in our annual income tax return form filing package are:
– Preparing and reviewing tax computations to ascertain the tax positions of the company
– The process of completing tax returns (Form C, C1, PT, TA, TC, TR, or TN).
– FREE for the Submission of the Tax Payable Estimate (CP204) or the Tax Revision Estimate (CP 204A) for Corporate Tax
– Creating accompanying working sheets and appendices for tax returns
– Giving advice regarding the payment of any outstanding taxes due in accordance with the filed tax returns
– Providing out punctual deadline notifications (by email and by phone)
– Examining tax positions to support any appropriate tax incentive claims
– Timely information on the most recent tax developments and how they affect businesses.
* For responding to and handling tax-related questions from the tax authorities (additional fees apply depending on the intricacy of the queries)
You must first ascertain the tax residence and the quantity of chargeable income for each individual before using the progressive tax rate to calculate their income tax due in Malaysia. Some important aspects of Malaysia’s personal income tax are:
– With effect from the Year of Assessment 2020, residents’ taxable income is subject to personal income tax, which is payable at progressive rates ranging from 0% to 30%. Certain types of income are subject to withholding taxes for nonresidents. The tax rate on other income is thirty percent.
– Only income originating in Malaysia is liable to taxation for both residents and non-residents. Remittances of income from outside sources into Malaysia are exempt from Malaysia Income Tax as of January 1, 2004.
– The individual’s tax residency determines the different tax rules.
– The current year is used to assess income tax. The year of assessment (YA), sometimes known as the tax year, begins on January 1 and ends on December 31.
For information on the resident’s personal Income Tax Rate, please click Income Tax Rates.
Please take note of the following important dates that are associated with personal tax filing.
– Employee receipt of Form EA from the employer by the end of February the following year at the latest
– The deadline for filing Form BE, BT, M, and MT by an individual not engaged in business (sometimes referred to as an employee) is April 30, of the subsequent year.
– The following June 30th is the deadline for Form B filing by an individual operating as a sole proprietor.
– A partnership, with the exception of limited liability partnerships, LLPs, has until June 30 of the following year to file Form P.
| Form CP 22 | Notification of New Employee – Within one month of the date of employment initiation, an employer must use Form CP22 to notify the Inland Revenue Board (IRB) that its employees have begun working in Malaysia. |
| Form CP 22A | Cessation of Employment – an employer is required to notify the IRB of the cessation of employment of an employee by the completion of Form CP22A at least 30 days before the date of cessation unless the employee is subject to the Monthly Tax Deduction (MTD) and deduction has been made by the employer or whose income is below the minimum amount subject to MTD, and employer is aware that the employee is to be employed elsewhere in Malaysia. |
| Form CP21 | Departure from Malaysia for a Period Exceeding 3 Months – an employer is required to notify the IRB of departure of an employee (most of the case will be expatriate) from Malaysia for a period of more than 3 months by the completion of Form CP21. The employer is required to withhold any money in the employer’s possession owing to the expatriate who has ceased or is about to cease employment until 90 days after the IRB receives the Form CP21 or upon receipt of the tax clearance letter, whichever is earlier. The employer can then release the balance of money withheld from the employee after the settlement of the outstanding taxes (if any) as shown in the tax clearance letter. |
| Form E | Every employer must furnish the Form E of its employees’ employment income no later than 31 March of the following year. |
| Form EA | Statement of remuneration (Form EA) completed and provided to the employee on or before the last day of February of the following year for employee’s personal income tax purpose. Form EA is not required to be sent to IRB. |
The MTD system covers tax withholdings from job income.
The following are the obligations of the employer under the MTD Rules:
– According to the Schedule of MTD or the Computerized Calculation Method, deduct the MTD from the employee’s pay each month or in the relevant month, and then pay the Director General.
– As directed by the Director General and in compliance with Rule 4 of the MTD Rules, subtract additional amounts from the employee’s pay.
– The entire amount of taxes withheld by the employer from employees’ compensation during the previous calendar month, or as much as should have been withheld, must be paid to the Director General by the fifteenth of each month.
– Provide accurate and comprehensive employee data on a return (Form CP39/CP39A) for filing extra deductions or MTD payments.
– For a period of seven years following the end of the calendar year in which the employee’s compensation is withheld in accordance with the MTD Rules, keep and maintain in safe custody the necessary papers.
Inform every employee of his following responsibilities:
– Should provide the employer with a TP3 Form in order to advise them of information about his past job during the current year.
– Should send a TP1 Form to the employer in the event that the worker wants to request refunds and deductions for the applicable month. The employer’s approval is required before the deductions and rebate can be implemented.
– During a period of seven years following the conclusion of the assessment year under the Act, to keep and retain in safe custody any receipts related to claims of deductions.
– Must provide the employer with correct and full personal information, as well as notify them of any updates to his personal data.
– Should provide accurate information about his personal tax liability in a designated form; failing to do so is considered an offense.
For more information on MTD: www.hasil.gov.my
The definition of “remuneration” for MTD has been changed by new statutory regulations that have been implemented in Malaysia. Employers need to be informed that certain employees now have different compliance obligations when it comes to income tax liabilities in Malaysia. Please see Important Changes to Monthly Tax Deduction Rules for further details.
| Form type | Category | Due Date for Submission |
| Form BE | Resident Who Does Not Carries On Business | 30 Aprilof the following year |
| Form BT | Resident individual (Knowledge/Expert Worker) | |
| Form M | Non-resident individual | |
| Form MT | Non resident individual (Knowledge/Expert Worker) | |
| Form M | Non-resident individual (with business income) | 30 Juneof the following year |
| Form MT | Non resident individual (Knowledge/Expert Worker with business income) | |
| Form B | Resident individual who carries on business | |
| Form P | Partnership |
You may file your tax return using any of the following modes:
E-Filing:
– With ezHASil e-Filing, you can electronically file your tax returns. Convenient, quick, and more accurate, the e-filling system calculates your tax obligations instantly once you enter your income, deductions, relief, and refund.
– You can use a tablet or smart phone to electronically file your tax return. Taxpayers can use the system at mlatihan.hasil.gov.my using any of the following compatible devices: iPhone and iPad running iOS 4.0 and above; Android 2.2 (Froyo) and above; BlackBerry Playbook with OS 6 and above; Windows Phone 7.0 and above; and Windows Phone 7.5 (Mango) preferred.
– In order to promote greater e-filing, the IRB typically extends the deadline for filing tax returns by two weeks using e-filling. Please make sure you file your tax return by the deadline by regularly checking the IRB’s official website, www.hasil.gov.my, for the current YA filing deadline.
– If taxpayers do not process their refund within 90 days of the due date (for electronic filing) or 120 days of the due date (for manual filing), the lRB is now required to pay interest to them. Consequently, filing taxes online will also result in a quicker refund.
– View ezHASiL Centralized Interface User Manual.
– If you haven’t already registered for a tax file, you can do it online via e-Daftar or at the closest or other LHDN branch. For additional details on individual tax registration, please click this link.
– Using a paper tax return for filing:
– You should have received the Tax Return Form from IRB by mail 2 months before the filling deadline if you filed your Tax Return using paper-based form for prior years.
– In the event that you do not receive the necessary form, you can print a soft copy of the form from the LHDN website or pick it up at any branch. For the purpose of filing taxes, only the Malay version of the form may be used, and it must meet the IRB’s printing specifications.
Even though a partnership is tax-exempt, it is nevertheless required to file a yearly income tax return, or Form P, which details all of the income it received and the business expenses it deducted from its income throughout the year. The partnership has the option to electronically fill out Form P or submit it on paper.
June 30 is the deadline for submitting Form P.
Every partner must receive a Form CP30 from the previous partner, who is also in charge of completing Form P. In order for partners to disclose their partnership income within the allotted time frame—30 June for individuals and 7 months following the end of the financial year for companies—they must receive Form CP30, Apportionment Of Partnership Income.
ANS 1: With effect from the Year of Assessment 2020, resident individuals are generally subject to progressive taxation, ranging from 0% to 30%. Withholding taxes on some forms of income are applicable to non-residents. Other income is subject to 30% taxation without any personal exemption. For both residents and non-residents, a comprehensive chart of progressive tax rates is available.
With effect from YA 2010, the employment income of a knowledge worker living in the Iskandar region of Malaysia who works for an individual engaged in any of the following qualifying activities: green technology, biotechnology, healthcare, education, creative industries, financial advisory and consulting, logistic services, and tourism. The tax rate on this employment income would be 15% of the individual’s chargeable income. (Applicable to knowledge workers between October 24, 2009, and December 31, 2020, who apply and start working in Iskandar, Malaysia.) However, a knowledge worker cannot take advantage of the 15 percent tax rate without first receiving approval from the Ministry of Finance.
With effect from YA2012, a person approved for the Returning Expert Program will pay a 15% tax on their employment income. The authorized person may choose to be taxed at the scale rates rather than 15 percent, according to the Talentcorp website (the organization in charge of the Returning Expert Program). The concession is available for use for five years.
ANS 2: In general, every citizen who owes taxes is required to file a personal income tax return. Normally, an individual who getting monthly net pay after EPF of RM3,141 or more and married individual with non-working spouses receiving monthly net compensation after EPF of RM4,001 or more may be liable to tax liability.
If a non-resident works in Malaysia for longer than 60 days, they must also file a personal income tax return. Furthermore, in the event that a non-resident individual works in Malaysia for a continuous period exceeding 60 days that spans two consecutive basis periods, or in the event that the continuous overlapping period combined with another period or periods surpasses 60 days, they will also be required to file a personal income tax return.
If you work as a public entertainer, a director of a firm, or otherwise carry out your trade in Malaysia, you are exempt from the 60-day restriction.
ANS 3: Ordinary tax laws apply to both resident and non-resident directors in Malaysia, with the exception that directors of controlled companies—a business with less than fifty members that is controlled by no more than five people in accordance with section 139—are not eligible for some tax concessions.
When it comes to employment income, there are often two options: the director’s fee (which is not subject to EPF) or the director’s salary (which is subject to EPF). Please be aware that paying directors’ fees typically requires approval from the corporation at a general meeting. In the year that they are received, directors’ fees are subject to taxation.
The amount of withholding tax that is deducted from income received by a non-resident payee (payee) and sent to the Malaysian Inland Revenue Board (IRB) is known as withholding tax.
An entity other than an individual conducting business in Malaysia is referred to as a “payer.” In accordance with any agreement for the use of any movable property, he must withhold tax from payments made to non-resident payees for services given, technical assistance, rentals, and other payments.
A non-resident person or body other than an individual in Malaysia that receives the aforementioned payments is referred to as the “payee.”
The Income Tax Act, 1967 provides that where a person (referred herein as “payer”) is liable to make payment as listed below (other than income of non-resident public entertainers) to a non-resident person (NR payee), he shall deduct withholding tax at the prescribed rate from such payment and (whether such tax has been deducted or not) pay that tax to the Director General of Inland Revenue within one month after such payment has been paid or credited to the NR payee.
| Payment Type | Income Tax Act 1967 | Withholding Tax Rate | Payment Form |
| Interest | Section 109 | 15% | CP37 |
| Royalty | Section 109 | 10% | CP37 |
| Special classes of income: Technical fees, payment for services, rent/payment for use of moveable property | Section 109B | 10% | CP37D |
| Contract payments | Section 107A (1) (a) & 107A (1) (b) | 10%, 3% | CP37A |
| Income under Section 4(f) | Section 109F | 10% | CP37F |
All withholding tax payments (except from those made by non-resident public entertainers) must be made using the appropriate, properly filled out payment forms, copies of the invoices that the NR payee has issued, and copies of the payment documents that serve as documentation of the payment date and credit to the NR payee.
15% withholding tax, or any other rate specified by the Double Taxation Agreement between Malaysia and the nation in which the non-resident payee resides, is levied on interest paid to NR payees. It is the last tax.
Perceived Malaysian origin of interest is established when:
1. Either the federal government or a state government is responsible for payment.
2. The person residing in Malaysia bears the responsibility for payment.
3. Any revenue earned in or originating from Malaysia is subject to interest charges as an outflow or expense.
There is no withholding tax on interest:
1. Interest given on a loan that has been approved to an NR payee
2. Interest given to an NR payee in Malaysia by a bank or financial firm with a license that isn’t:
a. This interest is accumulated to the NR payee’s place of business in Malaysia.
b. Interest is paid on funds designated by Bank Negara as necessary to sustain net operating funds.
The payer has 30 days from the date of payment or interest crediting to send the withholding tax, whether or not it was deducted, to the IRB.
Royalties are described as:-
Any amounts given in exchange for the use of, or permission to use:
a. The copyrights, creative or scientific creations, patents, models or designs, plans, trade secrets, formulas, trademarks, motion picture films, video tapes, or other types of reproduction that have been or will be used in Malaysia, as well as other similar property or rights, are all protected.
b. Expertise has become details involving technical, industrial, commercial or scientific knowledge, experience or talent.
c. Revenue obtained from the alienation of any property, know-how or information indicated in above paragraph of this term.
The Finance Act of 2016 will replace the current definition of “royalty” with the following one: “royalty” comprises any amounts received in exchange for or derived from:
a. usage of, or permission to use in relation to, any copyrights, software, creative or scientific works, patents, designs or models, blueprints, trade secrets, formulas, trademarks, or other similar property or rights
b. The utilization or authorization to utilize cassettes for radio or television transmission, motion picture films, video tapes, or other reproduction methods where said films or tapes have been or will be utilized or replicated in Malaysia, or other similar property or rights
c. The application of knowledge or information pertaining to technical, industrial, commercial, or scientific knowledge, expertise, or ability, or the right to do so
d. the act of receiving or having the right to receive sounds, visuals, or both that are made publically available by :
– fiber optics, cable, or related technologies
– satellite
e. Usage of, or permission to utilize, sounds or visual pictures, or both, in conjunction with radio or television broadcasts that are sent by
– fiber optics, cable, or related technologies
– satellite
f. The utilization of, or authorization to utilize, all or a portion of the radio frequency spectrum that is designated in a pertinent license
g. A complete or partial abstention from :
– any of the property or rights listed in paragraphs (a) or (b), or any knowledge, expertise, or skill listed in paragraph (c), to be used or granted the right to use them
– the granting of permission to receive or the receipt of any of the sounds or visuals described in paragraph (d)
– the utilization of, or the authorization to utilize, any of the sounds or visuals listed in paragraph (e)
– the utilization of, or providing permission to utilize, all or a portion of the spectrum designated in a spectrum license as stated in paragraph (f)
h. Any property, expertise, or information specified in this definition’s paragraphs (a), (b), or (c) being alienated
Withholding tax at the rate of 10% (or any other percentage specified by the Double Taxation Agreement between Malaysia and the nation in which the non-resident royalties are taxed) is levied on the gross amount of royalties paid to NR payees. It is the last tax.
A royalty is said to originate from Malaysia if :
a. Either the federal government or a state government is responsible for payment.
b. The person residing in Malaysia bears the responsibility for payment.
c. Any income received in Malaysia or derived from it is offset by the royalty as an expenditure or expense.
The withholding tax, whether or not it was deducted, must be sent to the IRB by the payer no later than one month from the date of payment or crediting the royalty.
Special classes of income include:
a. Amounts paid to the NR payee or his employee for services related to the installation or use of any equipment, machinery, or plant that was acquired from the NR payee, as well as for rights to utilize such property or rights.
b. Reimbursements for technical services, advice, or assistance provided in relation to the technical management or administration of any project, scheme, or scientific, industrial, or commercial initiative note
c. payments, in kind or form, for the use of any movable property, as stipulated in any agreement or arrangement.
In relation to paragraph (a) and (b), this provision is applicable to the sum linked to services executed within Malaysia. (Removed upon the enactment of the Finance Act 2016)
Subsequent to the enactment of the Finance Act 2016, earnings received by a non-resident under Section 4A(i) and (ii), and deemed to originate from Malaysia, must undergo withholding tax, regardless of whether the services were conducted within or outside Malaysia.
Note : The Act is set to undergo modification in the subsequent manner:-
Amounts disbursed for any counsel provided, or aid or services provided regarding any scientific, industrial, or commercial undertaking, venture, project, or scheme; or. (Effective from the initiation of the Finance Act 2018)
Withholding Tax Exemption in Relation to S.4A(i) and S.4A(ii) Income
On October 24, 2017, the Income Tax (Exemption) (No. 9) Order 2017 [P.U.(A) 323] was gazetted. As long as services are rendered outside of Malaysia, this order exempts non-residents from paying income tax on income that falls under Section 4A(i) and (ii) of the ITA 1967. S.109B of the ITA 1967 does not apply to the income exempt under this Order, as stated in paragraph 3 of the Order.
Withholding tax of the following is applied to contract payments paid to non-resident contractors for services rendered under a contract:
a. 10% of the contract payments for services on account of taxes due from the NR payee;
b. 3% of the contract payments for services on account of taxes owed by NR payee workers;
“Services under a contract” refers to any professional services or work completed in Malaysia in connection with or related to any project, undertaking, or plan that is being carried out there and the payer is required to send the withholding tax—whether or not it was deducted—to the IRB within 30 days of the contract payment date or crediting date.
Under Section 4(f) of the Income Tax Act, 1967, a withholding tax system has been implemented, effective January 1, 2009, to collect withholding tax at the rate of 10% on nonresidents’ various types of income. Gains and earnings that are not subject to Sections 4(a) through 4(e) of the Income Tax Act of 1967 are referred to as income under Section 4(f). According to the IRB, commissions, guarantee fees, and introducer’s fees are all considered forms of income under Section 4(f) if they do not constitute the recipient’s business income.
The following consequences would befall the payer if the non-resident tax wasn’t deducted and turned over to the IRB within a month after the earlier payment or crediting of the non-resident:
– 10% of the outstanding tax amount may be assessed as late payment penalties by the IRB
– If a qualifying capital expenditure is paid to a non-resident, the amount will not be deductible and no capital allowances will be available.
– The withholding tax and penalties are recoverable from the payer by the IRB as a government debt.
In addition to the late payment penalty previously indicated, the Director General of Inland Revenue may further apply a penalty under paragraph 113(2) of the Income Tax Act, 1967, starting on 1.1.2011 for the assessment year of 2011.
1. After the deadline for submitting an income tax return form for a year of assessment related to the payment, the withholding tax deduction is made or paid.
2. In order to determine the payer’s adjusted income, a deduction for costs associated with the payment is made in the Income Tax Return Form that is provided or claimed in the data sent to the Director General of Inland Revenue [proviso to paragraph 39(1)(j) of the Income Tax Act, 1967].
Regardless, the Director General of Inland Revenue is then paid the withholding tax as well as the penalty for failing to withhold.
