INTRODUCTION TO

MALAYSIAN TAX
ABFT 2613 Fundamentals of Taxation

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 INTRODUCTION TO MALAYSIAN TAX
WHAT IS TAX?

compulsory exaction of money by public authority for

public purposes enforceable by law

Australian case law

part of our earnings is contributed to the Government to

enable them to meet expenditures for the benefit of the
people

Tax Nasional 2001

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 INTRODUCTION TO MALAYSIAN TAX
TYPES OF TAXES

• Paid directly to the Inland Revenue

Direct taxes Board (IRB) Income tax, stamp duty, real property gain tax
• Example:

• Collected by 3rd party and remitted

Indirect taxes to the tax authority
• Example: sales& service tax (SST,GST), entertainment tax,
excise tax, custom duty

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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
SOURCES OF TAX LAW IN MALAYSIA

Statue laws (e.g. Income Tax Act [ITA] 1967, Real Property
Gain Tax Act 1976)

Case laws – decisions by Court

Informal laws – Public Ruling by Inland Revenue Board (IRB)

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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
TAX SYSTEM & YEAR OF ASSESSMENT

Current year
of
assessment
Self assessment system (YA)

• taxpayer is expected to
Effective
compute his tax liability for
each year of assessment
Individual – from 1 Jan
calendar year
based on the tax laws, 2000
guidelines and regulations
Company –
financial
year

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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
BASIS PERIOD

Individual
• YA2022 = Calendar year 2022
• Basis period =
01.01.2022 to 31.12.2022
Company
• YA2022 = depending on company
financial year
• For company year ended 30 June
01.07.2021 to 30.06.2022
• Basis period =

• For company year ended 31

December
• Basis period = _01.01.2022 to 31.12.2022

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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
SCOPE OF CHARGE

Derived and • Income derived in that country and

remittance basis foreign income receive in that country is
派生及汇款基础 taxable 在该国获得的收入以及在该国收
到的外国收入均需纳税

• Only income derived in that country is

territorial basis taxable 只有在该国家 / 地区获得的收入
领土基础 才需纳税

world scope basis

世界范围基础 • Any income derived in that country and
overseas will be taxable 在该国和海外获
得的任何收入均需纳税
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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
SCOPE OF CHARGE (CONT’D)

SCOPE OF CHARGE IN MALAYSIA

• “... a tax to be known as income tax shall be charged
for each year of assessment upon the income of any
Section 3 of ITA person accruing in or derived from Malaysia or
received in Malaysia from outside Malaysia”.

• Source of income must be in Malaysia

Meaning of accrued in or
derived from

Resident companies • World scope basis

carrying on the business of
banking, insurance or sea
or air transport [BISA]
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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
SCOPE OF CHARGE (CONT’D)
*all the tax are
acceptable except
TAXATION OF FOREIGN SOURCE INCOME (FSI) dividend income

Tax resident Non tax resident

effective from 1 Schedule 6 Para 28 of
January 2022 to 31 ITA
December 2026, the Income derived from
exemptions apply to sources outside Malaysia
and received in Malaysia
following: by any person who is not
• Company: Dividend income resident is exempted from
• Individual: All classes of income tax.
from foreign income is
not oversses it is not
taxable
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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
INCOME
Imagine a tree which
produces fruits, where
the tree represents
Regularity
capital and the fruit is
Not defined in the Act the income it produces
Periodical
Obtain guidance from
monetary
Case Law
return
Case Law

From Excluding
definite windfall
source gains
Tree which
produces
fruit

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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
INCOME (CONT’D)

The Act merely categorise the income under Section 4

S.4(a) - Gains or profits from business

S.4(b) - Gains or profits from employment
S.4(c) - Dividends, interest and discounts
S.4(d) - Rents, royalties or premiums

S.4(e) - Pensions, annuities or periodical payments Not in your

syllabus
S.4(f) - Gains or profits not falling under any of the
above S.4A - Special classes of income

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 INTRODUCTION TO MALAYSIAN TAX (CONT’D)
PERSON (SECTION 2 ITA 1967) includes the following

*Company Limited Liability Partnership

Body of persons (e.g. trust,

Corporation sole club, co-operative society)

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 Copyright © 2024 by Henry Ng

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in
any form or by any means, including photocopying, recording, or other electronic or mechanical
methods, without the prior written permission of the publisher.

The information contained in these slides are intended solely for personal non-commercial use only
and it should not be considered to be professional advice. You should refer to the relevant
legislation for advice concerning specific tax matters.

p3006@tarc.edu.my

017-417 0054

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