With a corporate tax rate of 17%/24% in Malaysia, the question on the minds of many business owners is “How can I reduce company tax in Malaysia?”
If you run a business in Malaysia, this Tax & Compliance Advisory in Malaysia article will provide you with four actionable ways to reduce your corporate tax payment and help your company save money.
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Ensure you claim all business expenses
This is a no-brainer, but you cannot afford to overlook it. You must ensure that no expenses are overlooked in your accounting records. Quite often, directors incur expenses on behalf of the company but fail to claim them back for accounting records at the end of your financial year.
Consider your directors’ salaries
Business owners should take the time to properly use their personal allowance. With proper planning, you can find a salary and dividend combination that results in a lower overall tax bill.
Take advantage of tax incentives for companies in Malaysia
Businesses can take advantage of a variety of tax incentives and tax exemption schemes. For example, if you want to reduce company tax payable in Malaysia, pioneer status firms can receive up to ten years of tax holidays. There is also an investment tax allowance ranging from 60% to 100%, as well as reinvestment allowances of up to 60% on your company’s capital investment.
These incentives are common in the healthcare, venture capital, energy, conservation, information technology, manufacturing, Islamic finance, biotechnology, hospitality, and environmental protection industries.
Types of Tax Deductions from Expenses
As stated above, you can deduct all business-related outgoings and expenses from your taxes. However, you may be unaware of what constitutes an expense. As a result, you may want to run the following list of allowable items. However, these allowable items may vary depending on your industry.
You can usually deduct the following items from your taxable income:
- Employment Costs
- Rental of Premises
- Business Insurance
- Lease Rental on Machinery and Plant
- Advertisement to Promote Sales
- Utilities, Phone, and Internet Charges
- License Renewal
- Travelling Allowance for Employees
- Petrol or Mileage for Employees
- Legal Fees for Debt Recovery
- Commission to Secure Sales
- Repainting of Company Premises
- Staff Training
How can WeCorporate help?
WeCorporate provides tax compliance and reporting, advisory, and transaction services to a wide range of clients in Malaysia. With our expertise in Malaysian corporate tax, we can help you increase your business profitability, ensure high accuracy, and stay compliant with Malaysian regulations.
Find out more about our tax services in Malaysia.
- Corporate tax is levied on Malaysian businesses with chargeable income under the Income Tax Act 1967. Taxable income includes profits, interests, dividends, royalties, premiums, rents, and other revenue.
- If you have recently registered your company, you must file an estimate of tax payable within three months of the start of operations, and then pay monthly instalments beginning in the sixth month of the relevant assessment year.
This is due on the 15th of each month. After the fiscal year has ended, you must file your tax with Lembaga Hasil Dalam Negeri Malaysia (the Inland Revenue Board Of Malaysia) via the e-filing portal. This must be completed within seven months.
- Malaysian corporations and LLPs are generally required to pay a corporate tax rate of 24%. However, if they have less than MYR2.5 million in paid-up ordinary share capital and less than MYR50 million in gross income, they will be subject to a two-tier tax rate of 17% and 24%.
Let WeCorporate Manage All Your Corporate Tax Needs
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