Yes, you need to register an income tax number if you are :

• Individual with single status who receive employment income in more than RM34,001 per year (after EPF deduction)
• Married individuals and unemployed spouses who receive employment income in excess of RM46,001 per year
• Individuals who run a business (even if the business suffers a loss)
• New employees subject to Monthly Tax Deduction (MTD or PCB)
• Individuals with taxable income
• Individuals who sell/buy real estate

Income tax number registration can be done by online via e-Daftar at https://mytax.hasil.gov.my/.

Supporting documents required are:

✓Identification card (new IC, military, police or passport)

✓Passport for non -Malaysian citizens

✓Business Registration Certificate (for individuals with business)

Updating personal information can be done by :

▪ Online via e-Kemaskini : https://mytax.hasil.gov.my/, or

▪ Customer Feedback Form : https://maklumbalaspelanggan.hasil.gov.my/Public (Update of name and identification number / registration number must be submitted via Customer Feedback Form)

The following rates are applicable to resident individual taxpayers for YA 2023:

For an individual, resident status is determined by reference to the number of days an individual is present in Malaysia. In general, an individual who is in Malaysia for a period or periods amounting to 182 days or more in a calendar year will be regarded as a tax resident. There are four scenarios where you would be considered a tax resident:

There are several methods you can opt for tax payment:

Important! Inland Revenue Board of Malaysia (IRBM) has stop accepting cheque and Money Order/Postal Order (MOPO) at all Pos Malaysia, Pusat Pengurusan Terimaan HASiL (PPTH), Stamp Duty Payment Counters and IRBM payment collection agent.

IRBM has introduced Bill Numbers as a mandatory reference for the payment of direct taxes except for the Monthly Tax Deduction (MTD) and Stamp Duty payment starting from 1st January 2023.

However, the usage of tax identification number (TIN) as a payment reference is still allowed during the transition period until further notice.

Resident companies are taxed at the rate of 24%.

For company with paid up capital not more than RM2.5 million and gross business income of not more than RM50 million, the first RM150,000 Chargeable Income will be tax at 15%; next RM150,001 to RM600,000 will be tax at 17% and the Chargeable Income above RM600,000 will be tax at 24%. The reduced tax rate for SME is effective starting from YA2023.

A Company is considered as an SME and can enjoy the preference tax rate if they fulfil the requirements below:

✓ Gross income from all business sources for the year is less than RM 50 million, and

✓ Paid up capital of the Company (ordinary shares) of less than RM2.5 million at the beginning of the basis period, and

✓ None of the related companies has a paid-up capital (ordinary shares) of more than RM2.5 million, and

✓ Not an investment holding company and not a dormant company.

With effective YA2024, additional condition for company or LLP to enjoy SME tax rate:

Not more than 20% of its paid-up capital in respect of ordinary shares, at the beginning of YA, is owned directly or indirectly by one or more:

• Companies incorporated outside of Malaysia; or
• Individuals who are not Malaysian citizens.

Tax assessment is based on current year basis, whereby income arises during its financial year will be assessed. For example, Company A closes its account on 31 December 2024. The income earned from January 2024 until December 2024 is taxed under the year of assessment (YA) 2024.

Details can be refer to : https://www.hasil.gov.my/en/company/basis-period-for-company/

Companies are required to estimate tax payable for a year of assessment (Form CP204). The e-CP204 is to be furnished no later than 30 days before the beginning of the basis period.

For example, Company A’s basis period is January 2024 until December 2024. The beginning of the period is on 1st January 2024. The CP204 shall be done latest by 30th November 2023.

The minimum amount of tax estimate for a year of assessment shall not less than 85% of the amount of the amendment of tax estimate or the tax estimate amount (if no amendment of tax estimate is submitted) for the immediate preceding year of assessment.

Companies, trust bodies, cooperatives and LLPs that have just started operations can determine the estimated tax payable for the first year of assessment according to the company's estimated profit.

Under paragraph 107C (4) (a) of the ITA 1967, for companies, cooperatives, trust bodies and LLPs that have just commenced operations and have a first basis period for a year of assessment of not less than six (6) months, e-CP204 must be submitted in a period of three (3) months from the date of commencement of operations of companies, cooperatives, trust bodies and LLPs.

For a newly-commenced company which is a small and medium enterprise (SME), it is not required to provide an estimate of tax for the first year of assessment with a basis period and the immediately following year of assessment (first 2Yas).

Companies are allowed to amend the tax estimates payable by submitting e-CP204A. Form CP204 for a year of assessment can be amended in the 6th, 9th month or 11th month, or all in the basis period for a year of assessment.

For instance, Company A (from Question 4) has estimated tax payable of RM30,000 in November 2023. Company A can revise the tax estimation amount in either month June 2024 (6th month of the basis period), September 2024 (9th month of the basis period) or November 2024 (11th month of the basis period).

Under the self-assessment system, companies are required to submit a return of income (Form C) within seven months from the date of closing of accounts. At the moment, 'e-filing’ or online filing of tax returns is the only method accepted by LHDN.

Audit is a routine activity of the IRBM under the self-assessment system. It is aimed at promoting voluntary compliance with tax laws and regulations. The ultimate objective is for a just and equitable tax administration so that taxpayers will only have to pay their fair share of tax.

A taxpayer can be selected for audit by IRBM at any time. Being selected for an audit does not in any way indicate that an offence has been committed.

There are several ways in which a taxpayer may be selected for audit. These include:

• Selection through risk analysis;

• Manual checking of Return Forms;

• Examination of third-party records, normally arising from audit or investigation of other taxpayers;

• Previous records on Return Form compliance;

• Selection based on specific industries;

• Selection based on specific issues peculiar to a particular group of taxpayers;

• Selection based on locality.

The basis and criteria of selection will be reviewed periodically. Reasons as to why a taxpayer is chosen for audit will not be disclosed.

Sources: https://www.hasil.gov.my/en/legislation/tax-audit/

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.

The Income Tax Act, 1967 provides that where a person (payer) is liable to make payment to a non-resident person (NR payee), he shall deduct withholding tax at the prescribed rate from such payment and pay that tax to the Inland Revenue Board Malaysia within one month after such payment has been paid or credited to the NR payee.

*'Payer' refers to an individual/body other than individual carrying on a business in Malaysia. He is required to withhold tax on payments for services rendered/technical advice/rental or

other payments made under any agreement for the use of any moveable property and paid to a -resident payee.

*'Payee' refers to a non-resident individual/body other than individual in Malaysia who receives the above payments.

Sources: https://www.hasil.gov.my/en/legislation/withholding-tax/

If you are paying the digital advertising fee to a non-resident for the usage of an application, the digital advertising fee is subject to withholding tax because it is deemed as a royalty payment.

If you did not remit the withholding tax to the Inland Revenue Board (IRBM), the digital advertising fee is not tax deductible.

Yes, anyone (tax residence & non-tax residence) who sells real property in Malaysia needs to file a Real Property Gains Tax (RPGT) return within 60 days from the date of disposal.

Real Property Gains Tax (RPGT) is a tax levied by the Inland Revenue Board (IRB) on chargeable profits derived from the selling of real property. The tax is levied on the profits made when the real property’s selling price is higher than the purchase price.

Form E is a declaration report to inform the IRB on the number of employees and the list of employee's income details.

IRB may refer to Form E on an employee's tax information and do a cross-check on whether an employee is reporting his income correctly. Thus, the information on Form E must be consistent with the information stated on an employee's EA Form.

If employers fail to submit Form E, they are liable to a fine of not less than RM 200 and not more than RM 20,000 or to imprisonment for a term not exceeding 6 months or to both under the Income Tax Act Section 120(1)(b).

You need to determine whether they have contract with you (master and servant relationship). If there is a contract signed between you and the workers, he is considered as your employee, and you must fill in the wages paid in your Form E. If no contract signed, he is not your employee and the wages paid need not to be filled in your Form E.

If the payee receives more than RM5,000 in a calendar year from the company, then the company must prepare Form CP58 for that payee.

BIKs are benefits not convertible into money (non-cash benefits), even though they have monetary value. The gross income of an employee (including a director) besides cash, it also includes the BIKs (e.g. accommodation or motorcars) provided by employers for the personal use or enjoyment of the employee. As BIKs is a kind of income to employees (including a director), it is subject to MTD/PCB too

The Company need to account the relevant benefit in kind into the employee’s EA such as company’s motor vehicle used by the directors. The relevant BIK also need to be accounted for calculation of monthly tax deduction (PCB) which the BIK value shall be divided by 12 months period.

Below is the prescribed value table from IRBM:

Perquisites are benefits in cash or in kind that are convertible into money received by an employee from the employer or third parties in respect of having or exercising the employment.

Perquisites have the following characteristics:

(a) Perquisites can be received regularly or casually.

(b) Perquisites can be received in cash or in kind. If it is received in kind, such items must have money's worth and are convertible into money.

(c) Perquisites can be received by an employee in respect of an employment contract entered into by him or is given by the employer or a third party voluntarily.

(d) Notwithstanding the above, a perquisite is subject to tax only if it arises in respect of having or exercising an employment.

Perquisites and BIK [including the value of living accommodation (VOLA)] are benefits arising from an employment. These benefits are gross income from employment under subsection 13(1) of the ITA and is taxable under paragraph 4(b) of the ITA. However, there are differences between these benefits

It is important for the employer to determine and categorise correctly whether a benefit otherwise than in money provided to the employee is a perquisite under paragraph 13(1)(a) of the ITA or a BIK under paragraph 13(1)(b) of the ITA.

CP38 is an additional tax deduction issued by LHDN. CP38 requires the employer to make additional deductions in the form of monthly instalments (MTD/PCB) from their employees’ salaries.

This additional tax deduction is calculated based on the employees monthly taxable income. This additional income tax deduction based on the Tax Deduction Chart that is issued by the Inland Revenue Board of Malaysia (IRBM).