Introduction to Corporate Tax in Malaysia
Corporate tax in Malaysia is governed by the Income Tax Act 1967 and administered by the Inland Revenue Board (LHDN). Every company incorporated in Malaysia — resident or not — is taxed on income accruing in or derived from Malaysia, and resident companies are also taxed on certain foreign-sourced income remitted into the country. Understanding your obligations here isn't optional bookkeeping trivia; it directly affects how much of your profit you actually keep.
Current Corporate Tax Rates
The standard corporate income tax rate in Malaysia is 24%. SMEs with paid-up capital not exceeding RM2.5 million and gross business income not exceeding RM50 million qualify for a tiered rate instead: 15% on the first RM150,000 of chargeable income, 17% on the next tranche up to RM600,000, and 24% above that. Budget announcements can adjust these tiers and thresholds, so confirm the exact figures for your filing year with LHDN or your tax agent rather than relying on any single article.
What Counts as Chargeable Income
Chargeable income is your business profit after deducting allowable expenses — not your total revenue. Expenses genuinely incurred "wholly and exclusively" in producing income are generally deductible: staff salaries and EPF/SOCSO contributions, rent, utilities, professional fees, and business-related travel among them. Capital expenditure (buying equipment, renovating premises) isn't deducted directly but may qualify for capital allowances instead, spread over several years. Getting this classification wrong is one of the most common reasons a tax computation needs correcting.
Key Filing Deadlines
Corporate tax returns (Form C) must be filed within 7 months from the company's financial year end. Most companies are also required to submit CP204 tax estimates before the start of the financial year and pay in monthly instalments throughout it — under-estimating by too wide a margin can itself trigger a penalty, separate from late-filing penalties. Missing the Form C deadline results in penalties from LHDN that increase the longer the return stays outstanding.
A Word on SST
Corporate income tax and Sales & Service Tax (SST) are separate obligations administered under different rules, and it's easy for a growing business to overlook SST registration once its taxable turnover crosses the relevant threshold. If your business sells taxable goods or provides taxable services, check your SST position alongside your income tax position rather than assuming one covers the other.
Need help with your corporate tax filing, CP204 estimates, or SST registration? Contact Sai Associate at 016-4411190.