Malaysian companies (Sdn Bhd) pay corporate income tax at 24% on chargeable income. Small companies with paid-up capital below RM2.5 million enjoy a preferential 17% rate on the first RM150,000 of profit. Here is what every Malaysian business owner needs to know about corporate tax.
Malaysian Corporate Tax Rates 2026
| Company Type | First RM150,000 | Above RM150,000 |
|---|---|---|
| SME (paid-up capital below RM2.5M, Malaysian-owned) | 17% | 24% |
| Large company | 24% | 24% |
| Non-resident company | 24% | 24% |
Key Deductible Business Expenses
All expenses wholly and exclusively incurred for business: salaries and EPF contributions, rent and utilities, professional fees, marketing, insurance (business), capital allowances on equipment (20% initial allowance + 14% annual allowance), research and development expenses.
Dividends from Sdn Bhd
Malaysia operates a single-tier corporate tax system. Dividends paid by a Malaysian company are tax-exempt at the recipient's hand (individual or corporate). This means owner-directors can receive dividends tax-free on top of their salaries. Optimal mix of salary and dividends is a key tax planning consideration.
Corporate Tax Incentives
Several industry-specific incentives: Pioneer Status (5-year tax exemption), Investment Tax Allowance (60%โ100% capital allowance), Multimedia Super Corridor (MSC) status, Halal industry incentives, and Special Economic Zones. These incentives can effectively reduce the tax rate to near zero for qualifying companies.
Our editorial team specialises in Malaysian personal finance โ covering loans, taxation, insurance, EPF, and Islamic finance. Every article is fact-checked against Bank Negara Malaysia (BNM), LHDN, and major Malaysian bank publications. We reference our calculators (which use industry-standard formulas) to ensure consistency between our written content and tools. Learn more about our methodology โ