December 3, 2014 | Sharon Cheong
If you're planning to establish a small-to-medium business in Malaysia, there are certain tax guidelines that you need to remember. Regardless if your business is residential or non-residential in nature, all Malaysian Private Limited Companies (PLCs or, in Malaysian vernacular, Sdn. Bhd.) should appoint a tax agent that's licensed to prepare its tax file for submission to Malaysia's Inland Revenue Board.
Taxation of Foreign-Owned SMBs and Tax Agents
Your licensed agent or agency must prepare your tax returns every Year of Assessment. The information gathered will be based on the information that you submitted to the Inland Revenue Board. To comply with Thailand's Income Tax Act of 1967, your business should forward the returns within 7 months from the closing of your firm's financial year.
If your business' net profit is below RM 500,000, you must pay 19% of it in taxes. Every additional RM 1 beyond RM 500,000 will be taxed by 24%. These apply to all Malaysian Private Limited Companies with resident status that have at least 50% of their shares owned by Malaysians.
On the other hand, non-resident status companies must pay a 25% flat tax rate regardless of their earnings.
Why Having a Tax Agent Is Important
A competent tax agent should prepare your income tax computations and tax returns for your review and approval before they're submitted to the Inland Revenue Board. The agent or agency should also provide your business with advice regarding your corporate tax computation as well as payment dates.
Your agent or agency can also help out during tax refund claims processes, particularly if there's an overpayment of funds. However, as an SMB owner, you should take note that tax agencies and agents can only assist in filing the taxes. Your business is still responsible for the timely payment of taxes every Year of Assessment.
Besides taxes, you should also be aware of some fees. There's a minimum charge of RM 2,000 for active companies. Meanwhile, semi-active companies must pay RM 1,000 to RM 2,000. Last but not the least, dormant companies are required to pay at least RM 800 in fees.
Your tax agent in Malaysia can represent you in tax appeal proceedings, appointments with the Inland Revenue Board of Malaysia, discussions with tax authorities, and in the filing of your annual tax returns. Keep in mind that your tax agent must be duly licensed by the Finance Ministry of Malaysia's administrative department.
Servcorp provides corporate registration services and virtual offices to Malaysia-based businesses.