Taxes and Accounting in Malaysia

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Accounting Rules

Tax Year
The tax year begins on January 1 and ends on December 31 of the same year.
Accounting Standards
Public companies listed on the Stock Exchange have adopted FSR standards (Financial Reporting Standards), and the others the PERS standards (Private Entity Reporting Standards).
Accounting Regulation Bodies
Malaysian Accounting Standards Board
Accountant General's Department of Malaysia
Accounting Reports
Financial statements must include notes and policies, and they are composed of four declarations which appear in the annual report: a declaration of income, a balance sheet, cash flows, the movement of stocks.
Publication Requirements
According to the law all companies have to publish the following recordings : shareholders' details, details concerning the members of the board of directors, details concerning the expense account and the debt accounts of the company.
Public companies have also to publish their statutory accounts to the shareholders during the annual meeting.
Professional Accountancy Bodies
Malaysian Institute of Accountants
MICPA , Malaysian Institute of Certified Public Accountants
Certification and Auditing
Independent accountants must analyze the financial statements of public companies. For additional information.
Accounting News
Accountants Today website from the Malaysian Institute of Accountant

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Tax Rates

Consumption Taxes

Nature of the Tax
Sales tax and services tax.
Tax Rate
Sales tax is due on taxable goods manufactured or imported by any natural person or legal entity. The present rates of this tax are 5% (non essential food, building materials for exemple) and 10% (normal general rate).
Reduced Tax Rate
Sales tax exemption for bus operators on purchase of locally assembled buses. Sales tax exemption on solar system equipment system for usage by third parties be given to importers.
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Corporate Taxes

Company Tax
Tax Rate For Foreign Companies
Sales tax apply to non-residents.
Capital Gains Taxation
The tax rate on company profits is 25%. For any additional information.
Main Allowable Deductions and Tax Credit
The tax on SMEs is 20% on taxable profits up to 500 000 MYR, the balance being taxed at 26%. Only the deduction of spending carried out totally and exclusively in connection with profits is authorized. Losses can be deducted whatever the source for the same financial year: revenue from exploitation, dividends, holdings etc. They can be carried forward indefinitely to be deducted later. For any additional information.
Other Corporate Taxes
Companies carrying out activities upstream of the petroleum industry are taxed at 38% (petrol income tax).

Excise duties are levied on selected products manufactured in Malaysia, namely cigarettes, tobacco products, alcoholic beverages, playing cards, mahjong tiles and motor vehicles.

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Individual Taxes

Tax Rate

Individual income tax Progressive rates from 0% to 26%
Up to RM 2,500 0%
RM 2,501 - 5000 1%
RM 5001 - 20 000 3%
RM 20,001 - 35,000 7%
RM 35,000 - 50,000 12%
RM 50,000 - 70,000 19%
RM 70,000 - 100,000 24%
RM 150 000 and over 26%
Allowable Deductions and Tax Credit
Deductions attributed to taxpayers in Malaysia.
Special Expatriate Tax Regime
Expatriates posted to an OHQ (operational headquarters) or a representative office are only taxed on the part of their income attributable to the days they spend in Malaysia.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the conventions signed on the website of the Ministry of Taxation.
Withholding Taxes
Dividends: 0%, Interest: 15%, Royalties: 10%

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Sources of Fiscal Information

Tax Authorities
Malaysian Customs
Inland Revenue Board
Other Domestic Resources
Malaysian Industrial Development Authority

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Find more on about Taxes and Accounting in Malaysia.

Intellectual Property

National Organizations
Inside the Ministry of Trade and Consumption ( Kementerian Perdagangan Dalam Negeri Dan Hal Ehwal Pengguna) the Enforcement Division deals with problems of counterfeiting and pirating.

The central organization in charge of the protection and promotion of intellectual property rights is the Malaysian Intellectual Property Corporation (MyIPO). The appliction for a patent must be directly presented in Malaysia and will cover the whole country. Inventions can only be patented if they are new, not obvious and have an industrial application. A patent expires after 15 years but it can be extended in certain cases.

In order to register a trademark, it is necessary to seek its registration from the Registrar of Trade Marks and to indicate a user of the brand in the country. As soon as the trademark is registered, it becomes protected and its use is continuous.

Regional Organizations
Malaysia is a signatory to the ASEAN framework agreement on cooperation regarding intellectual property.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law Validity International Agreements Signed
Law on Patents 1983 (amended 1993)
20 years Patent Cooperation Treaty (PCT)
Law on Trademarks 1976 (amended 1994 and completed 1997)
Standards and regulations for trademarks 1983
10 years renewable without limit Nice agreement
Law on designs and industrial models 1996
5 years renewable twice  
Law on copyright 1987
Either up to 50 years after the author's death or 50 years after the first publication or the creation of the work Berne convention
Industrial Models
Law on designs and industrial models 1996
5 years renewable twice  

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Legal Framework

Independence of Justice
The judiciary in Malaysia is not independent. There is excessive influence of the executive over the judiciary, especially in politically motivated cases.
Equal Treatment of Nationals and Foreigners
Foreigners cannot be guaranteed an impartial trial from the country's judiciary.
The Language of Justice
The judicial language used in the country is Bahasa Malaysia.
Recourse to an Interpreter
Having an interpreter is possible.
Sources of the Law and Legal Similarities
The main source of the law in Malaysia is the constitution of 1957 (amended in 1963). The country's legal system is based on English common law and the judicial review of legislative acts in the Supreme Court. Islamic law is applied to Muslims in family matters. Each state in Malaysia has its own constitution which sometimes results in variations of law from state to state. Malaysia has not accepted compulsory ICJ jurisdiction.
Checking National Laws Online
Attorney General's Chambers
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National Standards Organizations
Department of Standards Malaysia (DSM)
Integration in the International Standards Network
Malaysia is a member of the International  Organization for Standardization, the International Electrotechnical Commission, the International Telecommunication Union and the Codex Alimentarius Commission. Considerable progress has been made in harmonizing Malaysian standards with international standards, in accordance with Malaysia's obligations which ensue from the OTC agreement with the WTO. Malaysia is also working on negotiating mutual recognition agreements with several APEC economies, basing itself on guidelines established by the international organizations.
Classification of Standards
The Malaysian standard is the NM.
Online Consultation of Standards
Standards can be consulted on the website Malaysia Standards Online Store (registration required).
Certification Organizations
Department of Standards Malaysia (DSM)
Standard and Industrial Research Institute of Malaysia

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Business Practices

General Information
Opening Hours and Days
Banks: from 10 am to 3 pm, Monday to Friday, from 9.30 am to 11.30 am on Saturday.
Public Administration: from 8 am to 1 pm and 2 pm to 4 pm Monday to Thursday, 8 am to 1 pm and 2.45 pm to 4 pm on Friday, from 8 am to 1 pm on Saturday.
Shops: from 10 am to 9.30 pm Monday to Sunday for large stores and 9 am to 6 pm for small shops.
During the month of Ramadan, economic activity is considerably reduced and working hours change.

Public Holidays

New Year's Day 1 January
Hari Raya Qurban February
Awal Muharam February
Birth of the Prophet Mohammed 15 February
Labor Day 1 May
Wesak Day May
Birthday of the King 4 June
National Day 30 - 31 August
Malaysia Day 16 September
Deepavali October - November
Hari Raya Puasa November
Christmas Day 25 December
Holiday Compensation
If a public holiday falls on a Saturday or Sunday, the Monday is a holiday instead.

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  • Azmi & Associates

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