Many doctors assume that opening a Sdn Bhd allows them to channel consultation fees from private hospitals into a company structure to enjoy a lower corporate tax rates. This assumption is incorrect——and risky.
On 16 March 2022, the Inland Revenue Board of Malaysia (IRBM) issued guideline titled: “Garis Panduan Layanan Cukai Ke Atas Pendapatan Pengamal Perubatan (Doktor Pakar) Di Hospital Swasta Sama Ada Ditaksir Di Bawah Individu Atau Syarikat”.
The guideline makes one thing absolutely clear:
Tax is based on who performs the service — not the company name printed on the contract.
When Hospital Consultation Income MUST Be Taxed Under Personal Name
If a specialist doctor examines patients, performs treatments, conducts procedures or surgeries, and the hospital collects fees for these services, the income is treated as the doctor’s personal business income.
This rule still applies even if:
- The hospital signs a service agreement with a company owned by the doctor
- The doctor channels the income through their own Sdn Bhd
- The doctor is a director, shareholder, or has a management arrangement with the hospital
The core principle:
➡The person performing the medical service is the taxpayer – not the company.
So, even with a company in the middle, the income is still yours personally.
How This Income Should Be Declared
Because it is considered personal business income under Section 4(a) of the Income Tax Act 1967:
- It must be declared using Form B (individual)
- Not Form C (company)
This also means:
If IRBM finds that consultation income routed through a company should have been declared personally, they may impose:
- Backdated tax
- Penalties
- Possible audit or investigation
What CAN Be Done Through a Company
A Sdn Bhd is still useful — but only for income not directly tied to performing specialist work inside the hospital.
Examples that may legitimately be taxed under a company:
- Aesthetic clinic business (outside hospital)
- Medical product supply business
- Training, speaking, advisory businesses
- Locum agency/management company (properly structured)
These should be separate commercial activities, not merely a vehicle to reroute hospital consultation fees.
When Consultation Income Becomes Employment Income
If the specialist is formally employed by the hospital (contract of service), then:
- Income is treated as employment income
- It must be declared through Form BE
- Corporate structures do not apply
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