Malaysian small to medium businesses (SMBs) or enterprises (SMEs) can avail of multiple tax benefits to get maximum tax savings. The Malaysian government has also incentivized SME growth by giving them tax benefits or breaks under certain legal circumstances for them to increase their potential profits and decrease the number of overhead expenses as they struggle to stay afloat in the first few years of their existence.
Lower Corporate Income Tax and Tax Rates
If your company has a taxable income of less than 500,000 Malaysian Ringgit, then your business with being taxed at a 19 percent rate versus the usual 25 percent. Before 2016, the reduced rate was at 20 percent, but because the Malaysian government wants to increase SME growth within the country, they lowered the reduction percentage even more.
Here are the two things you need to remember about Malaysia's personal income tax rates at present.
Malaysian Tax Incentives
Malaysia also offers a multitude of tax incentives that range from tax deductions to tax exemptions as well as allowances (which can be carried forward until a company decided to use it). These benefits depend on the sector your business resides. Here are the two most relevant ones for SME usage.
The flat rate applies for 5 years or half a decade from the date of completion of the merger. These SMEs will also acquire certain exceptions on stamp duty as indicated by the policies of this particular Malaysian tax incentive scheme.
Double Deductions in Malaysia
Aside from the incentives discussed above, other expenses qualify for a double deduction in Malaysia. These include the following:
If you wish to learn more about deductible expenses, read up on the PWC Malaysian Tax and Business booklet.
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