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As a business owner in Malaysia, it is important to understand the income tax rates for companies in 2021. The Malaysian tax system is governed by the Inland Revenue Board of Malaysia (IRBM), which sets the tax rates and policies for both individuals and companies. In this article, we will discuss the income tax rates for companies in Malaysia in 2021, and provide you with some tips to help you manage your taxes more efficiently.
Corporate Tax Rates in Malaysia
The corporate tax rate in Malaysia is 24%, which has remained unchanged for the year 2021. This rate applies to all resident and non-resident companies, on their chargeable income earned in Malaysia. However, companies with a paid-up capital of up to RM 2.5 million are eligible for a lower tax rate of 17%, which is known as the SME tax rate. This is aimed at supporting small and medium-sized enterprises in Malaysia.
Eligibility for SME Tax Rate
To qualify for the SME tax rate, your company needs to meet the following criteria:
- Be a resident company
- Have a paid-up capital of up to RM 2.5 million
- Have a business income of up to RM 50 million
It is important to note that if your company exceeds any of these criteria during the year, it will be disqualified from the SME tax rate and will be subject to the normal corporate tax rate of 24%.
Tax Deductibles for Companies
Malaysia provides a range of tax deductibles for companies, which can help to reduce your tax liability. Some of the common tax deductibles include:
- Employee salary and benefits
- Rental expenses
- Depreciation of assets
- Bad debts
- Donations to approved institutions
It is important to keep accurate records of your expenses to ensure that you can claim all eligible tax deductibles. This can help to reduce your tax liability and improve your cash flow.
Tax Filing and Payment
All companies in Malaysia are required to file their tax returns with the IRBM by 30th June of each year. The tax return should include details of your company’s income and expenses for the previous year, and any tax deductions that you are eligible for.
The tax payment is due by 30th September of each year, and can be made through several methods, including online banking, credit card, or cheque. Late payment of taxes may result in penalties and interest charges, so it is important to file and pay your taxes on time.
In conclusion, understanding the income tax rates for companies in Malaysia is important for all business owners. The corporate tax rate in Malaysia is 24%, and companies with a paid-up capital of up to RM 2.5 million are eligible for a lower tax rate of 17%. There are also several tax deductibles available for companies, which can help to reduce your tax liability. To ensure that you file and pay your taxes on time, it is important to keep accurate records and meet the tax deadlines set by the IRBM.
By managing your taxes efficiently, you can improve your cash flow and grow your business in Malaysia.