Date: Wednesday 23-Apr-14


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Invest in Malaysia

Taxation

4. Personal Income Tax

All individuals are liable to tax on income accrued in and derived from Malaysia or received in Malaysia from outside Malaysia. Income remitted to Malaysia by a resident individual is exempted from tax. A non-resident individual will be taxed only on income earned in Malaysia.

The rate of tax depends on the individual's resident status, which is determined by the duration of his stay in the country as stipulated under Section 7 of the Income Tax Act 1967. Generally, an individual who is in Malaysia for at least 182 days in a calendar year is regarded as a tax resident.

4.1 Resident Individual

A resident individual is taxed on his chargeable income after deducting personal reliefs at a graduated rate from 0% to 26% with effect from the year of assessment 2010.

4.1.1 Personal Relief

The chargeable income of resident individuals is computed by deducting the personal reliefs from the total income. The types of relief available are as follows:

Relief

RM

Self and Dependent

9,000
Medical expenses for parents
5,000 (Limited)
Basic supporting equipment
5,000 (Limited)
Disabled Individual
6,000
Education Fees (Individual)
5,000 (Limited)

Medical expenses for serious diseases

5,000 (Limited)

Complete medical examination

500 (Limited)
Purchase of books, journals, magazines and publications
1,000 (Limited)
Purchase of personal computer
3,000 (Limited)
Net saving in SSPN's scheme
3,000 (Limited)

Purchase of sport equipment for sport activities

300 (Limited)
Subscription fees for broadband registered in the name of the individual
500 (Limited)
Interest expended to finance purchase of residential property. Relief of up to RM10,000 a year for three consecutive years from the first year the interest is paid.

Subject to the following conditions:
10,000 (Limited)
(i) the taxpayer is a Malaysian citizen and a resident;
(ii) limited to one residential unit;
(iii) the sale and purchase agreement is signed between 10th March 2009 and 31st December 2010; and
(iv) the residential property is not rented out.
Where:

a)

2 or more individuals are eligible to claim relief for the same property; and

b)

total interest expended by those individuals exceeds the allowable amount for that year. Each individual is allowed an amount of relief for each year based on the following formula:

A x (B/C)

where;
A = total interest allowable in the relevant year;
B = total interest expended by the relevant individual in the relevant year;
C = total interest expended by all the individuals.

Husband/Wife/Alimony Payments
3,000 (Limited)
Disable Wife/Husband
3,500
Ordinary Child relief
1,000
Child age 18 years old and above, not married and receiving full-time tertiary education
1,000

Child age 18 years old and above, not married and pursuing diplomas or above qualification in Malaysia @ bachelor degree or above outside Malaysia in program and in Higher Education Institute that is accredited by related Government authorities

4,000

Disabled child

Additional exemption of RM4,000 disable child age 18 years old and above, not married and pursuing diplomas or above qualification in Malaysia @ bachelor degree or above outside Malaysia in program and in Higher Education Institute that is accredited by related Government authorities

5,000
Life insurance dan EPF
6,000 (Limited)
Premium on new annuity scheme or additional premium paid on existing annuity schemecommencing payment from 01/01/2010 (amount exceeding RM1,000 can be claimed togetherwith life insurance premium)
1,000 (Limited)
Insurance premium for education or medical benefit
3,000 (Limited)

4.1.2 Tax Rebate

The tax charged on a resident individual is reduced by way of the following rebates:

i) Income Tax Rebates For Resident Individual With Chargeable Income Less Than RM35,000

An individual with a chargeable income not exceeding RM35,000 enjoys a rebate of RM400 effective from year of assessment 2009. Where the wife is not working or the wife's income is jointly assessed, she also enjoys a further rebate of RM400. Similarly, a wife who is assessed separately will also enjoy a RM400 rebate, provided her chargeable income does not exceed RM35,000.

No. Tax Rebate

Year of Assessment 2009 Onwards
(RM)

a.

Separate Assessment

Wife

Husband

 

400

400

b.

Combined Assesment

Wife

Husband

 

400

400

Total
800
b.

Assessment Where Husband Or Wife Does Not Has Any Total Income

Wife

Husband

400

400

Total
800

ii) Other Tax Rebates

No. Tax Rebate
(RM)
a. Zakat/Fitrah
Subject to the maximum of tax charged
b. Fees/Levy on Foreign Workers
Subject to the maximum of tax charged

4.2 Non-Resident Individual

Effective from year of assessment 2010, a non-resident individual is liable to tax at the rate of 26% without any personal relief. However, he can claim rebates in respect of fees paid to the government for the issuance of an employment work permit.



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