RESOURCES

SALES AND SERVICE TAX (SST)

Personal Income Tax Johor Bahru | Accounting Firm Johor Bahru | Tax Relief
Manufacture in/ Imported into Malaysia
  • Changing the size, shape, composition, properties or quality of the material
  • Installation of tools and components into machines or equipment
  • Changing the quality of finished goods
  • In relation to petroleum, any process of separation, purification, conversion, refining and blending
Service Tax
  • Accommodation
  • Advertising Services
  • Betting and Gaming
  • Broking and Underwriting
  • Clubs
  • Courier Services
  • Customs Agents Services
  • Domestic Flight
  • Electricity

Sales Tax

Threshold: RM500,000.00

Rate: 5% or 10%

Submission Cycle: Bi-monthly

* To submit not later than the last day of the following month after the taxable period ended regardless there is any tax to be paid or not



Payment

Sales Tax: Accrual Basis

Service Tax: Payment Basis
*Contra system: Can deduct service tax for any cancellation and termination of services or any other reasons such as reducing premiums or discounts


  • Employment Services
  • Food & Beverages
  • Hire Passenger Vehicles Services
  • Information Technology Services
  • Motor Vehicle Services or Repair Centre
  • Paid Television Broadcasting Services
  • Parking Services
  • Professional Services
  • Telecommunication Services

Service Tax

Threshold: RM500,000.00

*except Restaurant RM1,500,000.00 and Credit Card or Charge Card and Custom Agent no threshold

Rate: 6%, A specific rate of tax of RM 25 is imposed upon issuance of principal or supplementary card and every subsequent year or part thereof

Submission Cycle: Bi-monthly

* To submit not later than the last day of the following month after the taxable period ended regardless there is any tax to be paid or not

The recovery of cost or a payment made by registered person on behalf of another party is termed as a “disbursement” and is NOT subject to Service Tax

A reimbursement is subject to Service Tax

WITHHOLDING TAX

Personal Income Tax Johor Bahru | Accounting Firm Johor Bahru | Tax Relief
Withholding tax is an amount withheld by the party making payment (payer) on income earned by a non-resident (payee) and paid to the Inland Revenue Board of Malaysia
  • Contract Payment
  • Interest
  • Royalty
  • Special classes of income: Technical fees, payment for services, rent/payment for use of moveable property
  • Interest (except exampt interest) paid by approved financial institutions
  • Income of non-resident public entertainers
  • Real Estate Investment Trust (REIT)
    (i) Other than a resident company
    (ii) Non Resident company.
    (iii) Foreign investment institution
    effective from 01/01/2007
  • Family Fund/Takaful Family Fund/Dana Am
    (i) Individual and other
    (ii) Non Resident Company
  • Income under Section 4(f) ITA 1967

ADVANTAGES OF SETTING UP A COMPANY NOW

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  • Tax Rebate RM20,000 each year for first three years of assessment

  • Technology solutions partner (TSP) grant up to RM5,000

    • For purchasing POS system

    • For setting up a company website

  • Tax reduction for cost of renovation (until 31 December 2021) up to RM300,000

  • Advantages for a SDN BHD

    • Personal wealth protection

      • The liability of its members is limited to the amount, if any, unpaid on shares held by the members only

      • A company incorporated under Companies Act 2016 is a body corporate and shall 

      • Have legal personality separate from that of its members

    • Continuous existence 

      • A company incorporated under Companies Act 2016 is a body corporate and shall continue in existence until it is removed from the register 

      • The company will exist even if the key director/ shareholder passed away

    • Transferable ownership 

    • Lower tax rate 

      • Tax rate for an enterprise will be based on personal income tax rate while for a private limited company (SDN BHD) will be based on company tax rate

    • Higher tax saving

    • Foreigner is also allowed for set up a SDN BHD 

  • Advantages of choosing us

    • We also have a branch located in Singapore. We can send all documents to our Singapore office for collection if the directors and shareholders are unable to come our JB office due to the lockdown between JB and SG boundary.

Kindly refer to our articles below for details information for each benefit and advantage.

Please feel free to contact us to explore more about Advantages for Setting Up a Company Now, Benefits of a Company and Why Choosing Us

ADVANTAGES OF A SDN BHD (PRIVATE LIMITED COMPANY)

Personal Income Tax Johor Bahru | Accounting Firm Johor Bahru | Tax Relief

Advantages of a SDN BHD

  • Personal wealth protection
  • Continuous existence
  • Transferable ownership
  • Lower tax rate
  • Higher tax saving
  • Foreigner is also allowed to set up a SDN BHD
  • Personal Wealth Protection
    • The liability of its members is limited to the amount, if any, unpaid on shares held by the members only
    • A company incorporated under Companies Act 2016 is a body corporate and shall
    • Have legal personality separate from that of its members

  • Continuous Existence
    • A company incorporated under Companies Act 2016 is a body corporate and shall continue in existence until it is removed from the register
    • The company will exist even if the key director/ shareholder passed away
  • Tax Rate
    • Tax rate for an enterprise will be based on personal income tax rate while for a private limited company (SDN BHD) will be based on company tax rate



  • Shareholder can declare dividend while director can receive director’s fees or director’s remuneration
    • For a SDN BHD, shareholder can take out profits from the company (provided that the company is solvent)
    • Director can also receive salary from the company
    • All these will be seem as drawing for an enterprise

TAX REBATE

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To stimulate business activities, the newly formed SMEs are given income tax rebates of up to RM20,000 for each year of assessment for the first 3 years of assessment subject to conditions

Beneficiary: SMEs Incorporated within 1 July 2020 to 31 December 2021

Conditions

  • SMEs registered under the Companies Act 2016;
  • Paid-up capital of RM2.5 million and below with annual sales not exceeding RM50 million per annum;
  • The amount of rebates is the capital expenditure or operating expenses incurred in each year of assessment subject to a maximum value of RM20,000 per year of assessment;
  • Unused tax rebates cannot be carried forward to the next year of assessment for tax deduction purposes;
  • This new entity must use separate plants, equipment and facilities and not transfer from existing or related companies; and
  • Other conditions will be set

TAX DEDUCTION FOR RENOVATION COST

Personal Income Tax Johor Bahru | Accounting Firm Johor Bahru | Tax Relief

A deduction shall be allowed for the costs of renovation and refurbishment of business premise incurred by the person from 1 March 2020 until 31 December 2021 and used for the purpose of its business

  • General electrical installation

  • Lighting

  • Gas system

  • Water system

  • Kitchen fittings

  • Sanitary fittings

  • Door, gate, window, grill and roller shutter

  • Fixed partitions

  • Flooring (including carpets)

  • Wall covering (including paint work)

  • False ceiling and cornices

  • Ornamental features or decorations excluding fine art

  • Canopy or awning

  • Fitting room or changing room

  • Recreational room for employee

  • Air-conditioning system

  • Children play area

  • Reception area

  • Surau

SME DIGITALISATION INITIATIVE

Personal Income Tax Johor Bahru | Accounting Firm Johor Bahru | Tax Relief
  • Features
    • Grant amounting up to 50% or a maximum of RM 5,000 from total invoice amount.
    • Great deals on digital solutions from a wide list of panels endorsed by MDEC.
    • Wide range of digitalization areas:-
      • Electronic Point of Sales (e-POS) System
      • Human Resource Payroll System (HR) / Customer Relationship Management (CRM)
      • Digital Marketing / Sales
      • Procurement
      • Enterprise Resource Planning (ERP) / Accounting & Tax
      • eCommerce
      • Remote working
  • Required Documents
    • Completed SME Digitalisation Initiative Application Form
    • Copy of Identity Card or Passport of Director (s) / Partner (s) / Proprietor(s), whichever is applicable.
    • Copy of business registration licenses (CCM, Form A/B, Form 24 & 49 and M&A or any similar forms under the Companies Act 2016).
    • Audited financial statement for the last financial year and the latest management account or evidende of sales turnover (if any).
    • Company’s bank statement for the last two (2) months.
    • Company’s profile (if any).
    • Invoice/billing and service agreement from authorized vendor listed by MDEC
  • Eligibility
    • The Company is at least 60% owned by Malaysians
      • The Company is registered under the relevant laws of Malaysia
      • The Company has been in operation for at least one (1) year
      • Company operation in one ( 1 ) year, company required to have a minimum annual sales turnover of RM 100,000
      • Company operation > two (2) years, company required to have a minimum annual sales turnover of RM 50,000 (preceding two (2) consecutive years)

  • How to Apply
    • The Company must contact and appoint one or more panel of Service Providers to perform any of the digitalisation services available (maximum of 3 panels).
    • The Company must complete and submit the application form together with the required supporting documents to any of the Bank's branches.
    • Once the application is approved, the Company is responsible to pay the difference of the total invoice after deducting the subsidized amount granted from the Initiative and to provide proof of payment to any of the Bank’s branches.
    • After proof of payment is provided, subject to the total invoice amount, the Bank will make a direct 50% payment of the total invoice amount or up to RM 5,000.00 to the Service Provider in one lump sum payment or in stages based on the Bank’s discretion

TRANSFER PRICING

Personal Income Tax Johor Bahru | Accounting Firm Johor Bahru | Tax Relief

Transfer pricing generally refers to intercompany pricing arrangements for the transfer of goods, services and intangibles between associated persons

According to Para 4 (1) of the Income Tax (Transfer Pricing) Rules 2012 within the Income Tax Act 1967, ‘A person who enters into a controlled transaction shall prepare a contemporaneous transfer pricing documentation.’

In Section 139 of the Income Tax Act (ITA), control refers to both direct and indirect control. Under the Guidelines, two companies are associated companies with respect to each other if one of the companies participates directly or indirectly in the management, control or capital of the other company; or the same persons participate directly or indirectly in the management, control or capital of both companies.

However, the Malaysian TP Guidelines 2012 further provide additional leeway for smaller tax payers to ease their compliance burden as follow:

Malaysian companies are required to prepare a full-fledged transfer pricing documentation if they have:

  • Gross income exceeding RM25 million; and
  • The total amount of related party transactions exceeding RM15 million or
  • Provision of financial assistance exceeding RM50 million (not applicable for financial institutions)

Any person which falls outside the above scope may opt to fully apply all relevant guidance as well as fulfill all Transfer Pricing Documentation requirements in the Guidelines; or alternatively may opt to comply with Transfer Pricing Documentation requirements under paragraph 25.4(a), (d) and (e) only. In this regard, the person is allowed to apply any method other than the five methods described in the Guidelines provided it results in, or best approximates, arm’s length outcomes.

a.    Organizational Structure

  • The taxpayer's worldwide organizational and ownership structure (including global organization chart and significant changes in the relationship, if any), covering all associated persons whose transactions directly or indirectly affect the pricing of the documented transactions; and
  • A description of the management structure of the local entity, a local organization chart, and a description of the individuals to whom local management reports and the country(ies) in which such individuals maintain their principal offices

d.    Pricing Policies

  • The formula adopted, including anticipated profit margin/mark-up and cost component
  • How the formula is applied
  • Who determine the pricing policy
  • How often is the policy being revised
  • Sample of documents to support the pricing policy
  • Comparability study to ensure the arm's length price

e.    Assumption, Strategies and Information regarding Factors that Influence the Setting of Pricing Policies

  • Relevant information regarding business strategies and special circumstances at issue, for example, intentional set-off transactions, market share strategies, distribution channel selection and management strategies that influenced the determination of transfer prices
  • Assumptions and information regarding factors that influenced the setting of prices or the establishment of any pricing policies for the taxpayer and the related party group as a whole
  • Documentation to support material factors that could affect prices or profits in arm's length dealings
It is worth noting that Malaysian companies are not required to submit transfer pricing documentation when filing a tax return. Effective 1 January 2021, the Director General of Inland Revenue (“DGIR”) can request for TP documentation to be submitted within 14 days upon request for TP audit cases which have commenced on or after 1 January 2021.

PERSONAL INCOME TAX

Personal Income Tax Johor Bahru | Accounting Firm Johor Bahru | Tax Relief
There are 3 return form types for PERSONAL INCOME TAX:

Form BE
  • Stay AT LEAST 182 days in Malaysia in a year (regardless of citizenship or nationality)
  • NOT carry on business
  • Submission due date: 30 April
Form M
  • Stay LESS than 182 days in Malaysia in a year (regardless of citizenship or nationality)
  • NO MATTER WHETHER carry on business
  • Submission due date: 30 April (not on business) or 30 June (carry on business)
Form B
  • Stay AT LEAST 182 days in Malaysia in a year (regardless of citizenship or nationality)
  • CARRY on business in Malaysia
  • Submission due date: 30 June
Some common questions you might be thinking of:

  • Director salary is type of employment income
    • If the director stay less than 182 days in Malaysia, he/she shall submit Form M
    • If the director stay at least 182 days and DO NOT carry on business in Malaysia, he/she shall submit Form BE by before 30 April
    • If the director stay at least 182 days and CARRY ON business in Malaysia, he/she shall submit Form B by before 30 June
  • Rental income can be BUSINESS income or NON-BUSINESS income
    • Letting of real property is deemed as a business source if maintenance or support services are provided in relation to the real property
  • Income derived from e-commerce is a business income. If the business is not registered as a SDN BHD or LLP, the owner shall submit the Form B or Form M by before 30 June
There are some tax relief allowed for tax resident:

  • Individual
    • Individual and dependent relatives RM 9,000.00
    • Education fees (Self) RM 7,000.00 (Restricted) 
    • Lifestyle – Expenses for the use / benefit of self, spouse or child in respect of: RM 2,500.00 (Restricted)
      • Purchase of books / journals / magazines / printed newspapers / other similar publications (Not banned reading materials)
      • Purchase of personal computer, smartphone or tablet (Not for business use)
      • Purchase of sports equipment for sports activity defined under the Sports Development Act 1997 and payment of gym membership
      • Payment of monthly bill for internet subscription (Under own name)
    • Lifestyle – Purchase of personal computer, smartphone or tablet for self, spouse or child and not for business use RM 2,500.00 (Restricted)
      • (Additional deduction for purchase made within the period of 1st June 2020 to 31st December 2020)
    • Life insurance and EPF INCLUDING not through salary deduction RM 7,000.00 (Restricted)
    • Education and medical insurance INCLUDING not through salary deduction RM 3,000.00 (Restricted)
    • Contribution to the Social Security Organization (SOCSO) RM 250.00 (Restricted)
    • Disabled individual RM 6,000.00
  • Family
    • Medical treatment, special needs and carer expenses for parents (Medical condition certified by medical practitioner) RM 5,000.00 (Restricted)
      • OR
        • Restricted to 1,500 for only one mother
        • Restricted to 1,500 for only one father
    • Basic supporting equipment for disable self, spouse, child or parent RM 6,000.00 (Restricted)
    • Medical expenses for serious diseases for self, spouse or child RM 6,000.00 (Restricted)
    • Complete medical examination for self, spouse, child RM 500.00 (Restricted)
    • Husband / wife / payment of alimony to former wife RM 1,000.00 (Restricted)
    • Child care fees to a registered child care centre / kindergarten for a child aged 6 years and below RM 3,00.00 (Restricted)
    • Purchase of breastfeeding equipment for own use for a child aged 2 years and below (Deduction allowed once in every 2 years of assessment) RM 4,000.00 (Restricted)
    • Disabled husband / wife RM 3,500.00
    • Disabled child RM 6,000.00
      • 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
  • Children
    • Each unmarried child and under the age of 18 years old RM 2,000.00
    • Each unmarried child of 18 years and above who is receiving full-time education ("A-Level", certificate, matriculation or preparatory courses) RM 2,000.00
    • Each unmarried child of 18 years and above that: RM 8,000.00
      • Receiving further education in Malaysia in respect of an award of diploma or higher (excluding matriculation/ preparatory courses)
      • Receiving further education outside Malaysia in respect of an award of degree or its equivalent (including Master or Doctorate).
      • The instruction and educational establishment shall be approved by the relevant government authority
  • Individual - Special for YA2020
    • Domestic travel expenses - (Accommodation expenses at premises registered with the Ministry of Tourism, Arts and Culture Malaysia and entrance fees to tourists attractions incurred on or after 1st March 2020) RM1,000.00 (Restricted)
    • Deferred Annuity and Private Retirement Scheme (PRS) - with effect from year assessment 2012 until year assessment 2021 RM3,000.00 (Restricted)

MCO3.0 JOHOR - JOHOR BAHRU, KULAI, KOTA TINGGI

Personal Income Tax Johor Bahru | Accounting Firm Johor Bahru | Tax Relief
Business
  • The government agreed to allow all sectors of the economy including the manufacturing sector to continue operating during MCO3.0 (except SPA surgery and reflexology)
  • Entertainment activities (including pub, theme park, indoor playground, family karaoke and cinemas) are not allowed
Employer:
  • Only 30% of management staffs are allowed to work in the office
  • ALL (100%) of non-management staffs are allowed to work in the office
  • Management staff: Based on the employment contract (means employer shall decide which staffs are considered as management staff of the company)
Documents to Bring When Return to Office:
  • MITI approval letter (Please refer to our Facebook page for the guide to get the letter)
  • Employer authorized letter

HRDF EXPANSION

Law Firm Johor Bahru | Company Lawyer Johor Bahru | Litigation Lawyer Johor Bahru

  • Malaysia Human Resources Development Fund (HRDF) has expanded the coverage of the PSMB Act 2001 with effect from 1 March 2021
  • Who are eligible under the expansion of the Act?
    • Malaysian employers across all sectors 
    • With a minimum of ten (10) local employees
  • HRDF is the levy collected by way of legal authority on eligible employers in Malaysia which is used for training, developing and upgrading the skills of their local employees, apprentices and trainees through training grants
  • The payment of the HRDF levy is the responsibility of employers which they are not permitted to deduct the wages of employees under any circumstances for the payment of the levy
  • Similar with EPF, all payment of the levy shall be made by the employer not later than the fifteenth day of the month immediately following the month in respect of which those payments fall due
  • Form 1 is avaible for online submission HERE
For more details, please refer to HRDF website HERE


There are some employer obligations you might be missed out:

  • Every employer in Malaysia have to contribution EPF, SOCSO, EIS and PCB
  • Part-time workers are also subjected to payroll contributions
  • The contribution rate are be different between different category (for example for employees above 60 years old)
  • Not every remuneration subject to payroll contributions

SME CERTIFICATE

Law Firm Johor Bahru | Company Lawyer Johor Bahru | Litigation Lawyer Johor Bahru

Manufacturing

 

Services and Others

Sales turnover: RM15M ≤ RM50M

OR

Employees: From 75 to ≤ 200

Medium

Sales turnover: RM3M ≤ RM20M

OR

Employees: From 30 to ≤ 75

Sales turnover: RM300,000 < RM15M

OR

Employees: From 5 to < 75

Small

Sales turnover: RM300,000 < RM3M

OR

Employees: From 5 to < 30

Sales turnover: < RM300,000

OR

Employees: <5

Micro

Sales turnover: < RM300,000

OR

Employees: <5

  • Full time employees:  Including all paid workers working for at least 6 hours a day and 20 days a month; or at least 120 hours a month (including foreign and contract workers)

  • The word ‘OR’ means a business will only need to satisfy either one of the criteria: sales turnover or number of employees

  • If a business exceeds the threshold for 2 consecutive years (base on financial year) then it is no longer an SME

  • Similarly, a business that is previously large can become an SME if it fulfils the qualifying criteria for 2 consecutive years

EPF CONTRIBUTION RATE REDUCE FROM 11% TO 9% FOR YEAR 2021

Law Firm Johor Bahru | Company Lawyer Johor Bahru | Litigation Lawyer Johor Bahru
With reference to the Malaysia Budget 2021, the employee’s Employees Provident Fund (EPF) share of the statutory contribution rate will be reduced from 11% to 9% with effect from the salary month 1 January 2021 to 31 December 2021 (or EPF contribution month 02/2021 to 01/2022).

This new statutory contribution rate for employees applies only to members below 60 years old who are liable for contribution. For members aged 60 years old and above, the statutory contribution rate for employees remains unchanged.
Employers can complete the KWSP 17A Khas 2021 and submitt via i-Akaun (Employer), which will begin from 14 December 2020. Employers are also required to keep the form received for their record.

** The KWSP 17A Khas 2021 can be downloaded from https://www.kwsp.gov.my/documents/20126/147525/Borang+KWSP+17A+%28Khas+2021%29.xlsx

MALAYSIA BUDGET 2021

  1. Bantuan Prihatin Rakyat (BPR)
    • Monthly Household Income 家庭月收入 ≤RM2,500 - RM1,200 for 1 child, RM1,800 for more than 1 children
    • Monthly Household Income 家庭月收入 RM2,501 to RM4,000 - RM800 for 1 child, RM1,200 for more than 1 children
    • Monthly Household Income 家庭月收入 RM4,001 to RM5,000 - RM500 for 1 child, RM750 for more than 1 children
    • Single (≥21 years old) ≤RM2,500 - RM350 
  2. Reduce 1% income tax rate (to become 13%) for chargeable income between RM50,001 to RM70,000 降低RM50,001至RM70,000应课税收入1%个人所得税率(至13%)
  3. Reduce EPF contribution rate employee portion from 11% to 9% 降低雇员部分的公积金率至9%
  4. Withdraw RM500 from account 1 from Jan'21 for a period of 12 months 从公积金第一户口每个月提取RM500,为期12个月
  5. Withdraw from account 2 to purchase insurance and takaful products 从公积金第二户口提取以购买保险
  6. Lifestyle tax relief expand to electronic newspaper subscription and additional RM500 for expenditure related to sports (including participating fee for sports competitions) 
  7. Extend 3 months job search incentive 延长求职津贴3个月:First month 80%, Second month 5%, Third month 3%
  8. Extand wage subsidy program specifically for tourism sector (including retail sector) for 3 months 求职津贴延长3个月:RM600 per month for up to 500 employees
  9. Appreticeship program 学徒计划:RM1,000 incentive up to 3 months for participant, RM4,000 training programs claim for employer
  10. Jaringan PRIHATIN programme:B40 will receive RM180 telecommunication credit for by Q1 2021 (used for internet subscription or buy a new mobile phone)
  11. eBelia Programme: One off RM50 to e-wallet account (aged 18 to 20 years) 一次性RM50至电子钱包户口(18至20岁)
  12. Targeted loan repayment assistant (TRA) - Moratorium instalments for 3 months 暂还3个月 OR reduce 50% of monthly repayment for 6 months 或是为期6个月减少50%分期付款 to borrowers who are BSH recipients or BPR AND micro enterprises with loans of up to RM150K
  13. Simplied TRA for M40 - Just make a self-declaration of the reduction of income 自我声明收入减少

More Related Article

WAGE SUBSIDY PROGRAM (WSP) 2.0
  • For Malaysian
  • Monthly salary ≤ RM 4,000.00
  • Existing employers who are receiving WSP SHALL apply WSP2.0 since 1st October 2020
  • Register betwwen: 1 October 2020 to 31 December 2020
  • Effective period: 3 months (Existing) or 6 months (New application)
  • Employers and employees must register or contribute to Perkeso before 1 September 2020 雇员及雇主需要在9月1号之前呈报Perkeso
  • Registered with SSM or other local authorities before 1 September 2020 于2020年9月1号之前成立
  • Shall retain employees whose monthly salary not more than RM4,000 for 6 months 6个月内不能解雇薪水不高于RM4,000的员工
  • Employees who are receiving hiring incentive NOT entitled to WSP 受惠于招聘激励的员工不能申请工资补贴
  • Employer no need to apply every month but will only need to update the employee's eligibility information in the system before 15th of the month (if any) 雇主不需要每个月提交新的申请,只需在该月的15号前在系统更新受惠员工资料(若有)
  • If fulfil the requirements and conditions, employer can apply for those employees rejected by Perkeso before as they do not register or contribute SOCSO before 1 April 2020. The subsidy will only release for 3 months only.
  • Supporting documents:
    • List of employee names;
    • Employer's bank account information (Copy of Bank Statement cover only);
    • Business Registration Number (BRN) information registered by the employer at the time of opening the bank account;
    • Copy of SSM / ROS / ROB / Professional, Scientific or Technical Services / Business License authority; and
    • PSU2.0 Account Declaration
  • Submit via prihatin.perkeso.gov.my since 1st October 2020
  • Company Size

    1 – 75 Employees

    76 – 200 Employees

    >200 Employees

    Subsidy

    RM600 per eligible employee

    Drop in Revenue

    Decreasing at least 30% revenue compare with the same months in the year 2019 after implementation of RMCO

  • ** The definition of Enterprise Size is based on the total number of Malaysian and non-citizen workers 雇员数量包括外籍员工
  • Submit a table showing comparison between year 2019 and the same month in the year 2020