Income Tax Malaysia 2018

The 2018 national budget was announced by Malaysia’s Minister of Finance on 27 October 2017.

The relevant proposals from an individual income tax Malaysia 2018 perspective are summarized below.

Reduction of certain individual income tax rates

Under the current legislation, the income tax structure for resident individuals is based on progressive tax rates ranging from 0% to 28% on chargeable income. Nonresident individuals are taxed at a flat rate of 28%.

To increase the disposable income of middle-income taxpayers and address the rising cost of living, the 2018 budget would reduce individual income tax rates for resident individuals by 2% for three of the chargeable income bands (ranging from MYR 20,001 to MYR 70,000), as follows:


Chargeable income bands:
Current tax rates (%)
Proposed 2018 tax rates (%)

0–5,000

0

0

5,001–20,000

1

1

20,001,35,000

5

3

35,001–50,000

10

8

50,001–70,000

16

14

70,001–100,000

21

21

100,001–250,000

24

24

250,001–400,000

24.5

24.5

400,001–600,000

25

25

600,001–1 million

26

26

Above 1 million

28

28

The projected income tax savings for individuals resulting from the tax rate reduction is between MYR 300 and MYR 1,000.

The reduction would be effective as from year of assessment (YA) 2018.

Tax exemption on rental income from residential homes

Rental income earned from residential homes owned by resident individuals currently is subject to tax at rates ranging from 0% to 28%.

To encourage Malaysian resident individuals to rent out residential homes at reasonable costs, subject to certain conditions, the 2018 budget would provide a 50% income tax exemption on rental income earned by Malaysian resident individuals, effective from YA 2018 to 2020.

Extension of period of relief for net savings in the National Education Savings Scheme (SSPN)

For YA 2012 to 2017, resident individuals have been eligible for tax relief of up to MYR 6,000 for net savings in the SSPN.

To further encourage savings for the purpose of financing the tertiary education of children, the 2018 budget would extend the relief for another three years, to YA 2018 to 2020.

Tax incentives for women returning to work after a career break

Under the current legislation, there are no tax incentives for women returning to work after a career break.

To encourage women to return to the workforce, women who go back to work after a career break of two or more years would be able to apply for an individual income tax exemption on their employment income for a maximum of 12 consecutive months.

The exemption would apply only to women returning to the workforce after a career break of at least two years as of 27 October 2017.

Applications for the exemption would have to be submitted to Talent Corporation Malaysia Berhad (“TalentCorp”) from 1 January 2018 to 31 December 2019, and the exemption would be effective for YA 2018 to 2020.

An individual who earns an annual employment income of RM25,501 (after EPF deduction) has to register a tax file.

With effect year 2010 an individual who earns an annual employment income of RM26,501 (after EPF deduction) has to register a tax file.

With effect year 2013 an individual who earns an annual employment income of RM30,667 (after EPF deduction) has to register a tax file.

Nevertheless, with effect year 2015 an individual who earns an annual employment income of RM34,000 (after EPF deduction) has to register a tax file.

If the employee is eligible for STD deduction, he is advised to register an income tax file before STD is implemented.

What should I do if my income is taxable?

Application to register an income tax reference number can be made at the nearest IRBM branch.

Documents Required For Registration

  • A copy of the latest Salary Statement (EA/EC Form) or latest Salary Slip
  • A copy of Identification card (IC) / police IC / army IC / international passport
  • A copy of marriage certificate (if applicable)

You can also register an Income Tax reference number via e-Daftar

Non-receipt of Income Tax Return Form (ITRF)

The Return Form for a resident individual with no business income will be issued and posted to all taxpayers every year through the process of `General Issue`.

If you do not receive the form, you can obtain it from :

  1. The nearest IRBM Branch, or
  2. Information Processing Department, Pandan Indah, Kuala Lumpur, or
  3. Download from IRBM website.

Please note that a photocopy of the form is not accepted for submission.

You are encouraged to use our e-filing facility if you do not receive a Return Form. Please contact any IRBM branch or our Customer Service Centre at 1-800-88-LHDN (5436), for further enquiries on e-Filing.

Quoted from:malaysiafreebies.com


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