Running a company in Malaysia means understanding how tax works. Whether you are just starting your business or managing an established company, here are some of the most common questions business owners ask about company tax now updated with the latest information from LHDN.
1. What is company income tax
Company income tax is the tax charged on a company’s profit earned in Malaysia. This applies to both resident and non-resident companies that carry on business or generate income within the country.
Tax is calculated based on chargeable income, which is your business income after deducting allowable expenses and any approved incentives.
2. How is company tax calculated
Your tax is based on the profit after expenses, not total revenue.
Start with your business income, then deduct all expenses that are wholly and exclusively related to earning that income.
According to LHDN, gross business income includes all amounts received or deemed received from your company’s trading, services, or business operations during the basis period.
After deducting allowable expenses such as rent, salaries, utilities, and professional fees, the remaining balance is your chargeable income which is the amount subject to tax.
3. What is the company tax rate
As announced by LHDN:
- For small and medium-sized companies (SMEs)
Companies with paid-up capital of RM2.5 million or less and gross business income not exceeding RM50 million will be taxed as follows
• The first RM150,000 of chargeable income at 15 percent
• The remaining chargeable income at 17 percent - For other companies
The standard corporate tax rate is 24 percent.
These rates are based on the latest LHDN updates and may change for future assessment years.
4. What expenses can be claimed
You can claim expenses that are directly related to running your business. Common examples include:
- Staff salaries, EPF contributions, and bonuses
- Rent, utilities, and office maintenance
- Business travel and marketing costs
- Professional services such as accounting and audit fees
Expenses that are personal, capital in nature, or unrelated to the business such as fines, private bills, or non-approved donations are not deductible.
5. When does my company need to file taxes
Every company must submit its Income Tax Return Form (ITRF) within seven months after the end of its accounting period.
For example, if your financial year ends on 31 December 2025, your tax return must be submitted by 31 July 2026.
You are also required to maintain complete accounting records and supporting documents for at least seven years, as stated by LHDN.
6. What happens if my company files late or misses payment
If your company fails to submit or pay tax on time, LHDN may impose penalties or additional tax. Late filing can lead to a 10 percent surcharge on the unpaid tax amount, and a further increase if it remains unpaid after notice.
To avoid penalties, file and pay on time and always keep your tax records ready.
7. Does a new company need to register for tax
Yes. Every company incorporated in Malaysia must register with LHDN to obtain a tax reference number within three months of incorporation.
This ensures your company is properly recorded and can begin submitting annual tax returns once it starts operations.
8. Where can I get help or more information
You can visit www.hasil.gov.my for official FAQs and updates from LHDN.
If you prefer personalised guidance, consult a licensed tax agent who can help you prepare and file correctly.
Understanding how company tax works helps you stay compliant and avoid unnecessary penalties. Keep your documents organised, follow the submission timelines, and always refer to LHDN for the latest information. When you handle your taxes correctly, you protect your business and build trust with both clients and authorities.
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| This article has been reviewed and updated as of November 2025 based on the latest information from LHDN (Lembaga Hasil Dalam Negeri Malaysia).
| Source: https://www.hasil.gov.my/en/company/frequently-asked-question-company/