Taxation In Malaysia

All the citizens in Malaysia should not be ignorance about what's going on within the country. Good tax payers will asked and inquiry where did their money financed to. The definition of tax is 'a sum of money paid by the citizens to the government on the income or value of purchases of certain specific goods and services'. In Malaysia, the citizens paid their tax to the In-Land Revenue Board (IRD).

The purpose of the government collecting tax from the citizens is to funding the development projects within the country such as upgrading and maintaining the public facilities, highway and transportation facilities and to control some of the product such as imposed a higher tax on cigarettes and foreign cars.

Tax is the biggest source of income for Federal Government's Revenue, where they contributed to almost 70% of country's total revenue. The federal government revenue in 2008 is expected to register a strong growth of 15.5% to 16,558 million ringgit or 22.6% of GDP in 2008.To boost participation of investors in Malaysia, government is loosening taxes on some products.

There are two types of taxes applicable in Malaysia :

• Direct taxes : must pay individually and directly to the authority or administration (ie : petroleum income tax, stamp duties and real property gains tax)
• Indirect taxes : government's collect taxes indirectly through imposition of tax on certain items and services (ie : import duties, export duties, sales tax and service tax (foods in restaurant, hotel rooms service, airfare, foreign cars))
  

Taxation in Malaysia (the articles below is taken from here)

Income of any person including a company, accruing in or derived from Malaysia or received in Malaysia from outside Malaysia is subject to income tax.

However, with effect from the year of assessment 2004, income received in Malaysia by any person other than a resident company carrying on business of banking, insurance or sea or air transport for a year of assessment derived from sources outside Malaysia is exempted from tax.

To modernize and streamline the tax administration system, the assessment of income tax was changed to a current year basis of assessment from the year 2000. The self-assessment system was implemented for companies in the year of assessment 2001 and for sole proprietors, partnerships, cooperatives and salaried groups, in the year of assessment 2004.

To learn more about the Malaysia tax structure, click here.