Income Tax Malaysia
Hey, freshers! Have you filed your income tax?
One of the things that we often overlook as fresher is filing income tax. If you’re new to filing taxes, you might have these misconceptions:
- Filing income tax is only for those who earn more than RM XXX annually.
- Filing income tax = Paying tax
- Filing income tax is troublesome and involves a lot of procedures
But that’s not the case!
First of all, filing income tax ≠ paying tax. Thus it’s not something that you only need to do if your “annual income exceeds XXX amount”.
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Who is required to file income tax?
No matter you are self-employed or employed, all income earned in Malaysia, including salary and commission, is taxable. We pay our taxes (cukai, which is tax in Malay) to the Inland Revenue Board of Malaysia (LHDNM – Lembaga Hasil Dalam Negeri Malaysia).
Effective since 2015, the law states that an individual employed in Malaysia that earns an annual employment income of RM34,000 (after EPF deduction) has to register for a tax file.
Who is required to pay taxes?
You will be taxable if your annual income reaches a certain amount. Attached is the income tax rate:
| Chargeable Income | Calculation (RM) | Rate( %) | Tax(RM) |
| 0 – 5,000 | On the first 5,000 | 0 | 0 |
| 5,001 – 20,000 | On the first 5,000
Next 15,000 |
1 | 0
150 |
| 20,001 – 35,000 | On the first 20,000
Next 15,000 |
3 | 150
450 |
| 35,001 – 50,000 | On the first 35,000
Next 15,000 |
8 | 600
1,200 |
| 50,001 – 70,000 | On the first 50,000
Next 20,000 |
14 | 1,800
2,800 |
| 70,001 – 100,000 | On the first 70,000
Next 30,000 |
21 | 4,600
6,300 |
| 100,001 – 250,000 | On the first 100,000
Next 150,000 |
24 | 10,900
36,000 |
| 250,001 – 400,000 | On the first 250,000
Next 150,000 |
24.5 | 46,900
36,750 |
| 400,001 – 600,000 | On the first 400,000
Next 200,000 |
25 | 83,650
50,000 |
| 600,001 – 1,000,000 | On the first 600,000
Next 400,000 |
26 | 133,650
104,000 |
| 1,000,001 – 2,000,000 | On the first 1,000,000
Next 1,000,000 |
28 | 237,650
280,000 |
| Exceeding 2,000,000 | On the first 2,000,000
Next ringgit |
30 | 517,650
………. |
Overwhelmed by the numbers? Don’t worry! With the help of advanced technology, you can always file your tax online.
What’s better? The system will automatically calculate the payable amount for you!
What is the minimum salary to pay income tax in Malaysia?
Any individual who earns a minimum of RM 34,000 after EPF deductions. It means individuals who earn RM 2,833 per month after EPF deductions from their salary or around RM 3,000 net. The RM 34,000 is not only your income from work, but it should include all of your income into account.
How to file your tax online?
First things first! The due date for submission of Income Tax Returns is:
- Individuals without a business source: On or before 30 April every year
- Individuals with a business source: On or before 30 June every year
There are also some preparations to do in advance:
- Income Tax Reference Number (No Rujukan Cukai) SGXXXXXXX
- e-Filing PIN
You can visit the nearest LHDN office to apply for both.
You can apply online too. Simply go to http://edaftar.hasil.gov.my/ to apply for your Income Tax Reference Number. Click “Online Registration Form” (Borang Pendaftaran Online), fill in your details, and log in to your account.
As for your e-Filing PIN, you can go to LHDN’s website: Feedback>Application. Select e-Filing PIN Number Application.
However, the easiest way is to visit your nearest LHDN branch as the staff can assist you with all the applications.
Note: The Inland Revenue Board of Malaysia (LHDN) website for filing income tax has been revamped! The following instructions and screenshots are based on the latest version of the website.
1. Log in
If this is your first time logging in, please choose ‘Login Kali Pertama’, and then fill in your PIN and identity your identity card (IC) number to complete the first step.
- Step 2: You are required to fill in your basic information, such as D.O.B, address, phone number, e-mail, password, and security questions.
- Step 3: Your name, identity card number, and Income Tax Reference Number will appear on the screen. Click ‘Hantar’ after you confirm your details.
- If the page shows ‘Sijil digital anda telah berjaya didaftar‘, then you can proceed to click Login e-Borang.
2. Choose your tax form
After logging in, you’ll find various tax forms for individuals from different sectors.
Usually, employed individuals will fill up Borang e-BE; self-employed individuals or employers will fill up Borang e-B. If you are a foreigner working in Malaysia, select Borang e-M.
The latest 2023 update of the LHDN website is quite advanced, as you can find the form that you need to fill in at ‘Status Borang E-filing’.
3. Fill in all the details
Next, you’ll see there are different sections in the form. Here, we fill in the ‘Borang e-BE’ for the employed individual.
In ‘Borang e-BE’, we need to fill in
- Personal Details (Maklumat Individu),
- Statutory Income (Pendapatan Berkanun)
- Tax Deduction/Rebate (Pelepasan Cukai/Tolakan Cukai)
*Pro Tip: Keep all the receipts you used for tax deduction/rebate as you might need to show them to the authorities if you were audited.
One good thing about filing your tax online is that the system will calculate the chargeable income and tax relief, showing you only the payable tax!
Now you don’t have to worry that you might get it wrong.
*If you don’t meet the taxable threshold after-tax deduction, the system will show 0 in the payable amount.
1. First, verify your personal details.
2. Verify your tax information. Make sure to key in your bank account details accurately so that you can receive your tax refund (if any) without much trouble
3. This is where you fill in your income! Fill in all the information according to the EA form provided by your company. You need to list down if you have any part-time job or rental income.
4. This is where you fill in the tax relief! Fill in all the details and leave the calculating to the system!
5. Make sure you fill in all the details correctly. On this page, you can view your income, tax relief and the final payable tax (if applicable).
4. Submit
After reviewing your details, click ‘Teruskan’ under ‘Summary’ (Rumusan), then click ‘Tandatangan & Hantar’ and it will bring you to the ‘Pengesahan Penerimaan’ page.
Congratulations, you just finished filing your income tax!
Before signing, you can click ‘Cetak draf’ to download and save your file.
Extra tips: Filing income tax as a foreigner
Foreigners who stay and work in Malaysia for more than 182 days are subject to tax, and they must file and pay their tax to the Inland Revenue Board of Malaysia.
On the other hand, according to the Income Tax Act 1967, only income derived from Malaysia is subject to income tax in Malaysia, while income earned outside Malaysia is not subject to tax. For example, Malaysians working in Singapore will have to file and pay their tax in Singapore; thus there’s no need to file and pay their tax to the Inland Revenue Board of Malaysia.
More details:
- If a foreign company employed the taxpayer and he doesn’t work in Malaysia and only provides services abroad, the income will be considered foreign-sourced. There will be no need for the taxpayer to file and pay the income tax in Malaysia.
- But, if the taxpayer provides services for a foreign company through mobile or internet in Malaysia, indicating that his/her income was derived from Malaysia, then he/she must file and pay the income tax.
- If a Malaysian resident individual uses the foreign-sourced income to buy properties and earn rental income in Malaysia, then he/she must pay the income tax.
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