3 Must-Know Tax Benefits for SMEs in Malaysia

by Derrick Kwa on April 29, 2015

Nobody likes paying taxes. Luckily, as a small business in Malaysia, there are some benefits available to you. With these benefits, your business will be able to enjoy a considerable amount of savings throughout tax season.

Lower Corporate Income Tax

If your business has a chargeable income of less than RM500,000, your company will be tax just 20%, as opposed to 25%. Next year (2016), that is set to reduce even further to 19%. This means that you, as a small business owner, won’t have to worry as much about corporate tax when you’re first starting out.

Tax Incentives

Malaysia offers a wide range of tax incentives, ranging from tax exemptions to allowances to tax deductions. Allowances can generally even be carried forward until fully utilized.

These tax incentives vary based on the sector your business is in, and you can see a more detailed overview in this PWC booklet. Here are two that should definitely be noted.

  • Information and Communication Technology
    Costs that are incurred on development of an e-commerce website for a business are given an annual deduction of 20% for 5 years.
  • Merger & Acquisition
    Enterprises in certain service sectors, if fully owned by Malaysians, carry out a scheme of merger or acquisition approved by the Small and Medium Enterprises Corporation Malaysia, will receive a flat tax rate of 20% on all income. This Flat tax rate will be in effect for 5 years from the date of completion of the merger. These enterprises will also receive certain stamp duty exceptions.

Double Deductions

In addition to the above incentives, some expenses qualify for double deduction. These include (but are not limited to):

  • Expenses incurred in obtaining recognized quality systems, standards and halal certification
  • Expenditure incurred by companies on the training of employees under an approved training program
  • Childcare allowances given to your employees
  • Expenses for Goods and Services Tax (GST) related training of employees in accounting and information & communication technology
  • Expenditure incurred in participating in career fairs abroad that are endorsed by TalentCorp.

For a full list of these deductible expenses, check out PWC’s Malaysian Tax and Business booklet. Making the most of these will help you make sure you’re not paying more tax than you have to.

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