Income Tax

Record keeping

In order to avoid paying extra business tax, you have to deduct the expenses incur from the business income that you have generated. Keep all your original and valid documents such as invoice/bill in order to get the deduction. Without keeping such documents, deduction of business expense is not allowed and you might have to end up paying extra taxes.

Example 1:

 RM
Business Income100,000
Allowed expense deduction(70,000)
Chargeable income30,000

Tax rate @ 18% = RM 30,000 X 18% = RM 5,400

 

Example 2:

 RM
Business Income100,000
Allowed expense deduction
*Assuming lost of invoice of RM 10,000
(60,000)
Chargeable income40,000

Tax rate @ 18% = RM 40,000 X 18% = RM 7,200

Important reference

Year Assessment 2017 – 2018:

  Rate
1Company with paid up capital not more than RM2.5 million
 1.1 On first RM 500,00018%
 1.2 Subsequent Balance24%
2Company with paid up capital more than RM2.5 million24%

Proposed (From YA2018 Onwards)

Chargeable Income (RM)%Tax (RM)Cumulative (RM)
First 5,000000
Next 15,000
20,000
000
Next 15,000
35,000
4650650
Next 15,000
50,000
81,2001,850
Next 20,000
70,000
142,8004,650
Next 30,000
100,000
206,00010,650
Next 150,000
250,000
2436,00046,650
Next 150,000
400,000
2537,50084,150
Next 200,000
600,000
2652,000136,150
Next 400,000
1,000,000
27108,000244,150
Exceeding 1,000,00028  

Submit Income Tax Return and make tax payment on time

Do maintain a good practice to file your income tax return and make tax payment on time to avoid unnecessary penalties. Avoiding the penalty is a way of saving your hard earn money.

10% of penalty which is increment from your tax payable is being charged if you are late to make the tax payment and there will be an additional 5% of penalty increment to the total balance of tax payable plus the 10% penalty stated above if payment is not made after 60 days from the date due.

Example:

Tax payable =  RM 10,000
10% penalty (late payment less than 60 days) = RM 1,000
Additional 5% penalty (late payment more than 60 days) = (RM 10,000 + RM 1,000) X 5% = RM 550