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.