Malaysia » Taxes

Income Tax	Capital Gains Tax	VAT

Residents and non residents are both bound to this type of Malaysian tax laws.

Individual Taxation 

Income tax is liable on residents and non residents of Malaysia getting financial gains from the sources present with in the country. Individual taxation law is also applicable on the married couples. This shared assessment system is not considered effective. Therefore couples usually depend on separate assessment plans. 

Tax allowances or other types of personal reliefs are only given to the permanent residents of Malaysia. These tax allowances are not given to the foreigners or non-residents living in the country.  

Income Tax

Foreigners or non-residents of Malaysian country are liable to pay income taxes on the income coming from the renal sources. The rate of these taxes is 28% on the total profit generating from the rental income source. Tax payer can deduct costs of expenses he use to maintain his asset like interest expenses, expenses on repairs, assessment tax etc. These expenses also include quit rent and the commission of the agent involved in the property related affairs.

Tax reliefs and other types of capital allowances are not acquirable for the buildings being used for residential or commercial purposes. Resident and non residents of Malaysia are also bound to pay Malaysia real estate corporate tax on all the property related corporations working in the country.  

Capital Gains Tax

Capital gains tax is not applicable any type of income. Capital Gains tax was abolished on first April 2007. This relaxation also includes Malaysia real estate capital gains tax on all types of properties.  

Previously Capital Gains Tax was called Real Property Gains Tax and was applicable on the foreigners only. These Capital Gains Taxes had a direct value of 30% on all the income gains due to disposal of the property during period of five years. In this way RPGT becomes 5% thereafter.

Property Tax

Assessment Tax

Rules and regulations of the assessment tax are as follows. Assessment tax is a type of local tax which is only applicable on the residential property.   

Rate of assessment tax is based on the yearly rental amount of the property on rent. This tax is assessed by the local authorities. Usually assessment tax has a flat value of 6%. This assessment tax is to be paid in two instalments.   

Quit Rent

Quit rent is also a type of local tax. Quit rent tax in imposes on all types of landed properties. This tax is payable annually. The rate of quit tax is 0.003 to 0.006 US dollars per square foot. Liability of this quit rent tax is usually figures less than 31 US dollars.   

Stamp Duty

Stamp duty for the transfer of the real property of RM 250,000 value is now halved. This new benefit on stamp duties was allowed on the 2008 budget. Stamp duty tax is one of the important Malaysia property taxes applicable within the country. For comparison, the stamp duties within the year 2007 and 2008 are given bellow. 

Price Stamp                       Stamp Duty in 2007                            Stamp Duty in 2008
RM250, 000                        RM4, 500                                    RM2, 250 (-50%)
RM150, 000                        RM2, 000                                    RM1, 000 (-50%)
RM350, 000                        RM6, 000                                    RM6, 000 (unchanged)

Inheritance Tax

Inheritance Tax is not assigned in the country. 

Other Taxes

VAT tax is not charged in Malaysia. On the other hand, government sale tax is charged. The value of 5% GST is assigned on all the hotel and restaurant bills. GST is also charged on other professional bills including lawyer’s bills.