Last Updated: Jan 05, 2009

Living There

INDIVIDUAL TAXATION
Resident individuals are taxed on their Malaysian-sourced income. Married couples
may file for joint assessment, but separate assessment is deemed to be more effective
in lowering over-all tax liability.

Foreign individuals who decide to become permanent residents of Malaysia will be

permitted to purchase residential property only under certain conditions. The Foreign
Investment Committee (FIC) provides the following guidelines:

• Each residential unit must be valued over RM60,000 (US$17,019)

• Your husband/wife must be a Malaysian citizen
• OR you must be qualified to apply for citizenship and submit the necessary
applications

INCOME TAX

Taxable income includes gains from a business, partnership income, employment

income, dividends, interest and rental income, royalties, premiums, and other gains or
profits.

Taxable income is computed by deducting personal reliefs and other rebates from the
gross income. Income tax is levied at progressive rates.

INCOME TAX
TAXABLE INCOME, RM
TAX RATE
(US$)
Up to 2,500 (US$709) nil
2,500 – 5,000 (US$1,418) 1% on band over US$709
5,000 - 20,000 (US$5,673) 3% on band over US$1,418
20,000 - 35,000 (US$9,928) 7% on band over US$5,673
35,000 - 50,000 (US$14,182) 13% on band over US$9,928
50,000 - 70,000 (US$19,855) 19% on band over US$14,182
70,000 - 100,000 (US$28,365) 24% on band over US$19,855
100,000 - 250,000 (US$70,911) 27% on band over US$28,365
Over 250,000 (US$70,911) 28% on all income over US$70,911
Source: Global Property Guide

The following personal reliefs are granted to residents to reduce tax liability:
PERSONAL RELIEFS
Types of Relief RM (US$)
Self 8,000 (US$2,270)
Additional relief for disabled individual 6,000 (US$1,702)
Spouse 3,000 (US$851)
Additional relief for disabled spouse 3,500 (US$993)
Child
1,000 (US$284)
-per child below 18 years old
4,000 (US$1,135)
- per child over 18 years old, unmarried and receiving higher education
Disabled child 5,000 (US$1,418)
Additional relief for disabled child over 18 4,000 (US$1,135)
6,000 (US$1,702)
Life insurance premiums
max
5,000 (US$1,418)
Medical expenses for parents
max
5,000 (US$1,418)
Medical expenses for self, spouse or child
max
Purchase of supporting equipment for disabled spouse, children, parent, 5,000 (US$1,418)
or self max
5,000 (US$1,418)
Fees expended on approved courses
max
Cost of purchasing books, journals or other similar publications for
700 (US$199) max
enhancing knowledge

If the resident individual’s chargeable (taxable) income is less than RM35,000

(US$9,928), additional rebates of RM350 (US$99) can each be claimed by the
taxpayer and his spouse. These additional rebates apply for married couples, whether
the couple is opting for either joint or separate assessment.

A taxpayer or his spouse can claim a rebate of RM500 (US$142) for the purchase of a
personal computer once every five years. The tax rebate is deducted from the tax
payable for individuals earning less than RM3,500 (US$993).

CAPITAL GAINS TAX

As of 01 April 2007, there is no tax on capital gains because the Real Property Gains
Tax (RPGT) is suspended indefinitely.

Before April 2007, disposals of real property by residents are subject to capital gains
tax at the following rates:
REAL PROPERTY
GAINS TAX
HOLDING TAX
PERIOD RATE
Up to 2 years 30%
2 years – 3 years 20%
3 years – 4 years 15%
4 years – 5 years 5%
Over 5 years nil

Citizens and permanent residents are entitled to an exemption of RM5,000

(US$1,418) or 10% of the gain, whichever is higher.

PROPERTY TAX

Assessment Tax on Residential Property

The assessment tax is a local tax based on the annual rental value of the property, as
assessed by the local authorities. It is generally levied at a flat rate of 6% for
residential properties and payable in two installments.

Quit Rent

The quit rent is a local tax levied on all landed properties, payable annually at a rate of
1 sen (US$0.003) to 2 sen (US$0.006) per square foot, wherein RM1 is equal to 100
sen (cents). The quit rent liability is generally estimated to be less than RM100
(US$28) per year.