What is Income Tax?
Tax is charged yearly on individuals who receive income from:
- Business profits;
- Employment income;
- Dividends, interest, or discounts;
- Rent, royalties, or premiums;
- Pensions, annuities, or other regular payments; and
- Any other gains or profits not listed above.
The Income Tax Act 1967 (ITA) governs the administration and collection of income tax. The Inland Revenue Board of Malaysia (IRBM) is a key agency under the Ministry of Finance responsible for collecting tax.
Who is Taxable?
- Income tax is charged annually on any income earned or sourced from Malaysia, or income received in Malaysia from abroad.
- Individuals whose total taxable income exceeds the threshold must register for an income tax file.
- The tax treatment depends on residency status. Residents are taxed at progressive rates and may claim tax reliefs under sections 45A to 49 of the ITA 1967. Non-residents are taxed at a flat rate of 30% and do not qualify for any reliefs
- Income from foreign sources received in Malaysia is exempt from tax.
Why tax must be paid?
Government revenue is used to manage Malaysia and fund development expenses.
The government allocates tax collections for national security, infrastructure like roads, hospitals, and schools, as well as economic and social development, including healthcare, education, and public welfare.
How to submit?
Return forms can be submitted in two ways:
- Manually to the Tax Information & Record Management Section, LHDNM. Refer to the guide notes available on the IRBM portal (hasil.gov.my) under Forms > Download Forms > Individual > Year of Assessment.
- Online via the MyTax system at https://mytax.hasil.gov.my.
