Free invoice generator and tax tools for Malaysia

A small business in Malaysia deals with a handful of collectors. The Inland Revenue Board (LHDN, also called HASiL) collects income tax. A sole proprietor or partner is taxed as an individual on a progressive scale that currently runs from 0% to 30%, with the top 28% and 30% bands starting at RM600,001 and RM2,000,000. A company is taxed at its own rate. A company with ordinary share capital of RM2.5 million or less and annual sales not above RM50 million (the same test applies to an LLP's capital contribution) counts as a micro, small or medium enterprise and pays 15% on the first RM150,000 of chargeable income, 17% on the next RM450,000 up to RM600,000, and 24% above that (Ministry of Finance, Budget 2027 Tax Measures, Appendix 11).

Tax on sales is not collected by LHDN. The Royal Malaysian Customs Department runs sales tax and service tax, and payroll contributions go to separate bodies: the Employees Provident Fund (KWSP/EPF) for retirement savings, and PERKESO for social security and the Employment Insurance System. A business that employs people therefore files with LHDN, Customs, EPF and PERKESO, each through its own portal and on its own calendar.

The most recent reform on the table is in Budget 2027, published by the Ministry of Finance on belanjawan.mof.gov.my. It proposes, from year of assessment 2027, cutting the two lower MSME bands by one point each, to 14% on the first RM150,000 and 16% on the next RM450,000, and adding a RM100,001 to RM150,000 band for individuals at 24% (down from 25%), with the 19% band for RM70,001 to RM100,000 falling to 18% and the top 30% rate starting at RM1,000,000 instead of RM2,000,000. These are proposals until the Finance Act that carries them is gazetted, so use the current rates for any return you file before then.