Income Tax Malaysia 2018

The 2018 national budget was announced by Malaysia’s Minister of Finance on 27 October 2017.

The relevant proposals from an individual income tax Malaysia 2018 perspective are summarized below. 

Reduction of certain individual income tax rates

Under the current legislation, the income tax structure for resident individuals is based on progressive tax rates ranging from 0% to 28% on chargeable income. Nonresident individuals are taxed at a flat rate of 28%.

To increase the disposable income of middle-income taxpayers and address the rising cost of living, the 2018 budget would reduce individual income tax rates for resident individuals by 2% for three of the chargeable income bands (ranging from MYR 20,001 to MYR 70,000), as follows:

Chargeable income bands
(MYR)
Current tax rates
(%)
Proposed 2018 tax rates
(%)
0–5,000 0 0
5,001–20,000 1 1
20,001–35,000 5 3
35,001–50,000 10 8
50,001–70,000 16 14
70,001–100,000 21 21
100,001–250,000 24 24
250,001–400,000 24.5 24.5
400,001–600,000 25 25
600,001–1 million 26 26
Above 1 million 28 28

The projected income tax savings for individuals resulting from the tax rate reduction is between MYR 300 and MYR 1,000.

The reduction would be effective as from year of assessment (YA) 2018.

Tax exemption on rental income from residential homes

Rental income earned from residential homes owned by resident individuals currently is subject to tax at rates ranging from 0% to 28%.

To encourage Malaysian resident individuals to rent out residential homes at reasonable costs, subject to certain conditions, the 2018 budget would provide a 50% income tax exemption on rental income earned by Malaysian resident individuals, effective from YA 2018 to 2020.

Extension of period of relief for net savings in the National Education Savings Scheme (SSPN)

For YA 2012 to 2017, resident individuals have been eligible for tax relief of up to MYR 6,000 for net savings in the SSPN.

To further encourage savings for the purpose of financing the tertiary education of children, the 2018 budget would extend the relief for another three years, to YA 2018 to 2020.

Tax incentives for women returning to work after a career break

Under the current legislation, there are no tax incentives for women returning to work after a career break.

To encourage women to return to the workforce, women who go back to work after a career break of two or more years would be able to apply for an individual income tax exemption on their employment income for a maximum of 12 consecutive months.

The exemption would apply only to women returning to the workforce after a career break of at least two years as of 27 October 2017.

Applications for the exemption would have to be submitted to Talent Corporation Malaysia Berhad (“TalentCorp”) from 1 January 2018 to 31 December 2019, and the exemption would be effective for YA 2018 to 2020.

An individual who earns an annual employment income of RM25,501 (after EPF deduction) has to register a tax file.

With effect year 2010 an individual who earns an annual employment income of RM26,501 (after EPF deduction) has to register a tax file.

With effect year 2013 an individual who earns an annual employment income of RM30,667 (after EPF deduction) has to register a tax file.

Nevertheless, with effect year 2015 an individual who earns an annual employment income of RM34,000 (after EPF deduction) has to register a tax file.

If the employee is eligible for STD deduction, he is advised to register an income tax file before STD is implemented.

What should I do if my income is taxable?

Application to register an income tax reference number can be made at the nearest IRBM branch.

Documents Required For Registration

  • A copy of the latest Salary Statement (EA/EC Form) or latest Salary Slip
  • A copy of Identification card (IC) / police IC / army IC / international passport
  • A copy of marriage certificate (if applicable)

You can also register an Income Tax reference number via e-Daftar

Non-receipt of Income Tax Return Form (ITRF)

The Return Form for a resident individual with no business income will be issued and posted to all taxpayers every year through the process of `General Issue`.

If you do not receive the form, you can obtain it from :

  1. The nearest IRBM Branch, or
  2. Information Processing Department, Pandan Indah, Kuala Lumpur, or
  3. Download from IRBM website.

Please note that a photocopy of the form is not accepted for submission.

You are encouraged to use our e-filing facility if you do not receive a Return Form. Please contact any IRBM branch or our Customer Service Centre at 1-800-88-LHDN (5436), for further enquiries on e-Filing.

Chargeability of Income Tax for Foreigners

If you are a foreigner employed in this country you must give notice of your chargeability to the Non-Resident Branch or the nearest IRBM branch within 2 months of your arrival in Malaysia.

Customer Service Centre

Scope of Taxation

An individual who is resident in Malaysia is taxable on all income accruing in or derived from Malaysia and on income received from outside Malaysia. The scope of taxation of an individual depends on his resident status.

However, with effect from the year of assessment 2004, income received in Malaysia from outside Malaysia is exempted from tax. Hence, an individual, either or non-resident, is taxable only on income accruing in or derived from Malaysia.

Tax Relief for Resident Individual

Year 2017

No.

Individual Relief Types

Amount (RM)

1

Self and Dependent

9,000

2

Medical expenses for parents

OR

Parent
Limited 1,500 for only one mother
Limited 1,500 for only one father

5,000 (Limited)

OR

3000 (Limited)

3

Basic supporting equipment for disabled self, spouse, child or parent

6,000 (Limited)

4

Disabled Individual

6,000

5

Education Fees (Self)
(i) Other than a degree at Masters or Doctorate level-for acquiring law, accounting, Islamic financing, technical, vocational, industrial, scientific or technological skills or qualifications;
(ii) Degree at Masters or Doctorate level-for acquiring any skills or qualification

7,000 (Limited)

6

Medical expenses for serious diseases for self, spouse or child

6,000 (Limited)

7

Complete medical examination for self, spouse, child

500 (Limited)

8

Lifestyle:
(i) Purchase of books journals, magazines, printed newspaper and other similar publications (except banned reading materials) for self, spouse or child;
(ii) Purchase of a personal computer, smartphone or tablet for self, spouse or child;
(iii) Purchase of sports equipment for any sports activity as defined under the Sports Development Act 1997 (excluding motorized two-wheel bicycles) and gym memberships for self, spouse or child; and
(iv) Payment of monthly bill for internet subscription

2,500 (Limited)

9

Purchase of breastfeeding equipment

1,000 (Limited)

10
Net saving in SSPN’s scheme (total deposit in year 2017 MINUS total withdrawal in year 2017)
6,000 (Limited)

11

Child care fees to a Child Care Centre or a Kindergarten

1000 (Limited)

12

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:

(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.

10,000
(Limited)

13

Husband/Wife/Alimony Payments

4,000 (Limited)

14

Disable Wife/Husband

3,500

15

Ordinary Child relief

2,000

16

Each unmarried child of 18 years and above who is receiving full-time education (“A-Level”, certificate, matriculation or preparatory courses).

2,000

17

Each unmarried child of 18 years and above that:
(i) receiving further education in Malaysia in respect of an award of diploma or higher (excluding matriculation/preparatorycourses).
(ii) receiving further education outside Malaysia in respect of an award of degree or its equivalent (including Master or Doctorate).
(iii) the instruction and educational establishment shall be approved by the relevant government authority.

8,000

18

Disabled child

6,000

Additional exemption of RM8,000 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

19

Life insurance dan EPF INCLUDING not through salary deduction

6,000 (Limited)

20
Deferred Annuity and Private Retirement Scheme (PRS) – with effect from year assessment 2012 until year assessment 2021
3,000 (Limited)

21

Insurance premium for education or medical benefit INCLUDING not through salary deduction

3,000 (Limited)

22
Contribution to the Social Security Organization (SOCSO)
250 (Limited)

Allowable Deduction from Aggregate Income

No

Contribution

Notes

1

Gift of money to the Government, State Government or Local Authorities.

Subsection 44(6)

2

Gift of money to Approved Institutions or Organisations.
(Amount is limited to 7% of aggregate income)

Subsection 44(6)

3

Gift of money or cost of contribution in kind for any Approved Sports Activity or Sports Body.
(Amount is limited to 7% of aggregate income)

Subsection 44(11B)

4

Gift of money or cost of contribution in kind for any Approved Project of National Interest Approved by Ministry of Finance.
(Amount is limited to 7% of aggregate income)

Subsection 44(11C)

5

Gift of artifacts, manuscripts or paintings.

Subsection 44(6A)

6

Gift of money for provision of Library Facilities or to Libraries.

Subsection 44(8)

7

Gift of money or contribution in kind for the provision of facilities in Public Places for the benefit of disabled persons.

Subsection 44(9)

8

Gift of money or medical equipment to any healthcare facility approved by the Ministry of Health.

Subsection 44(10)

9

Gift of paintings to the National Art Gallery or any State Art Gallery.

Subsection 44(11)

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

No.
Tax Rebate

Year Of Assessment 2001 – 2008

Year Of Assessment 2009 Onwards

(RM)
(RM)

a

Separate Assessment
Wife
Husband


350
350


400
400

b

Combined Assessment
Wife
Husband


350
350


400
400

Total

700

800

b

Assessment Where Husband Or Wife Does Not Has Any Total Income
Wife
Husband


350
350


400
400

Total

700

800

Other Tax Rebates

No.

Tax Rebate

(RM)

a

Zakat/Fitrah

Subject to the maximum of tax charged

b

Fees/Levy on Foreign Workers ( deleted from year assessment 2011 )

Subject to the maximum of tax charged

How To Register Tax File?

Application to register an income tax reference number can be made at the nearest branch to your correspondence address or at any IRBM branch of your convenience without reference to your correspondence address.

Documents Required For Registration

Please forward the following documents together with the application form to register an income tax reference number:-

a. A copy of the latest Salary Statement (EA/EC) or latest Salary Slip
b. A copy of Identification card / police i.c. / army i.c. / international passport
c. A copy of marriage certificate (if applicable)

Application form to register an income tax reference number can be obtained from the nearest IRBM counter or

Register online

You can register online via e-Daftar

Compare items
  • Total (0)
Compare