Who Needs to Register for Tax File?

e-Daftar is an application that facilitates taxpayers through online registration of tax file in Malaysia. Income tax files of companies, employers, individuals, partnership and limited liability partnership (LLP) can be registered via e-Daftar.

The following entities and accounting firms in Malaysia must file their taxes:

• Individual who has income which is taxable
• A businessperson with taxable income
• An employee who is subject to monthly tax deduction
• Unregistered companies with IRBM
• A business or company which has employees and fulfilling the criteria of registering employer tax file
• The partnership which are not yet registered with IRBM
• Limited Liability Partnership (LLP) which are not yet registered with IRBM

The documentations vary from different categories as discussed below:

Individuals without Business Income

• National Identification Card
• Identification can also be proven through Armed Forces card, Police card, or Passport

Individuals with Business Income

• National Identification Card
• Identification can also be proven through Armed Forces card, Police card, or Passport
• Business Registration Certificate

Local company (Private Limited Companies and Limited Company)

• Notice of registration of the company under section 15 Companies Act 2016 or certificate of incorporation of a company under section 17 Companies Act 2016 (if available)
• Notification of Change In The Register Of Directors, Managers And Secretaries under section 58 Companies Act 2016

Foreign Companies

• Notice of registration of the foreign company under section 562 Companies Act 2016
• Particulars Of Change Or Alteration Relating To Foreign Company under subsection 567(1) Companies Act 2016

Partnership

• Copy of the partnership business registration certificate issued by the Companies Commission of Malaysia (SSM)
• Complete list of partners and any required documents like their ID papers.

Limited Liability Partnership (LLP)

• Copy of the notice of registration of the LLP or copy of the certificate of registration of the LLP (if available) under section 11 of the Limited Liability Partnership Act 2012

OR

• Copy of the notice of registration of the conversion to LLP under section 32 of the Limited Liability Partnership Act 2012 (if relevant) issued by the Companies Commission of Malaysia (SSM)

Complete list of partners and any required documents like their ID papers.

Tax registration can be done with the help of an auditing firm in Malaysia as it will guide you throughout the process of tax registration and tax filing and inform you about the tax incentives available in Malaysia. However, the tax registration can also be done individually as well because the whole process is smooth and efficient.

After you have filled the forms and attached the required documents, they can be sent via:

• The online website of e-Daftar
• Fax: 03-8922 1676
• You must state the application number when faxing the documents.
• For any queries, issues, or comments can contact the IRBM’s line at 03-8913 3800

After you have completed the application and the submission is accepted online, you will get the reference number in 3-4 working days.

How to check the application status?

The application status can be examined online by entering your application number in e-Daftar.

Tax Rates

In Malaysia, the rates without availing any tax incentives are:

• Individual Tax Rate (Resident): 0% to 28% for year of assessment 2019 (0% to 30% for year of assessment 2020)
• Company Tax Rate (Resident): 17% and 24% for Small Medium Enterprise (SME) for year of assessment 2019 onward (24% for non-SME)

In terms of the income tax system, Malaysia has adopted a unique territorial system of taxation. Any person or company, local and foreign, are subject to income tax for any income accruing in or derived from Malaysia or received in Malaysia. However, certain exemption from income tax is available for certain type of income.

For example, foreign source income received in Malaysia is exempted from income tax as stated in the local tax law except for banking, insurance companies and air/sea transportation companies. Meanwhile, capital gain is not subject to income tax but certain gain may subject to Real Property Gains Tax in Malaysia.

Individual tax have to be paid by the local residents as well as non-residents of Malaysia for income generated from Malaysia. According to the law, generally, a person who has lived in Malaysia for at least 182 days is declared a tax resident in Malaysia.

Petroleum Tax

Petroleum operations business in Malaysia is subject to petroleum income tax, which is about 38% of the total revenue generated through fuel operations and income tax rate of 24% applies to petroleum functions in fields.

Local Income Tax

In Malaysia, no state, provincial, or local government has imposed taxes on income.

Small-scale Businesses

Small companies, as well as auditing firms, if fulfilled certain criterias, would be able to enjoy massive tax incentives in Malaysia. Company incorporated in Malaysia with shareholder’s funds not exceeding RM 500,000 and has at least 60% of Malaysian ownership is eligible for certain tax incentive such as Pioneer Status which company can get a 100% tax exemption for a period of five years so it can thrive in the competitive market.

Another available tax incentive is the Investment Tax Allowance where 60% of the qualifying capital expenditure incurred within five (5) years can be offset against its statutory income. A sole proprietor or partnership is eligible to apply for the incentives provided that a new private limited/limited company is formed to take over the operations/activities of the existing production/activities.

Have more questions regarding the registration of company tax file in Malaysia? Feel free to get in touch with us.