An individual is tax resident in Malaysia if he or she stays more than 182 days per year in the country.

Both tax residents and non-residents are taxed on income derived from Malaysia. Foreign-source income is usually not subject to taxation.

Personal income tax is levied at progressive rates from 0% to 28% on income exceeding MYR 1,000,000. Non-residents are taxed at a 28% flat rate. Dividends from Malaysian sources are treated as ordinary income, while interest is tax exempt. Both interest and dividends from foreign sources are tax exempt, whether remitted or not.

Capital gains derived from the sale of securities are tax-exempt. Those derived from the sale of real properties are subject to the Real Property Gains Tax at rates of 30% for properties held up to 3 years, 20% on the fourth year, 15% on the fifth year and 5% after 5 years.

There is a local property tax, which is 6% of the value of the annual rent according to the assessment of the local authorities. There is a stamp duty levied on the transfer of real property assets at a 3% rate, and at 0.3% on share transactions.

There are no taxes on inheritances and on an individual’s net worth.
Goods and Services tax is levied on certain goods and services at a 6% rate.

With regard to corporations, resident entities are taxed on their income accrued in Malaysia at a 24% rate. Reduced tax rates may apply to SMEs. Companies incorporated in the federal territory of Labuan may elect to pay a fixed amount of MYR20,000 or be taxed at 3% on their profits.

To learn more about Malaysian corporate taxation, legal framework and tax treaties, check out incorporations.io/malaysia.