Other Governing Laws

The Inland Revenue Board (IRB)

The Inland Revenue Board (IRB) is, an agency of the Ministry of Finance (MOF) which, is responsible for the overall administration of direct taxes enacted under the following Acts:

1. Income Tax Act 1967
2. Petroleum (Income Tax) Act 1967
3. Real Property Gains Tax 1976
4. Promotion of Investment Act 1986
5. Stamp Act 1949
6. Labuan Business Activity Tax Act 1990

More details on the tax regimes are available on the IRB’s website http://www.hasil.gov.my/

The Royal Malaysian Customs Department

• The Royal Malaysian Customs Department is responsible for the administration of taxes and duties enacted under the following Acts:

   

  1. Sales Tax Act 2018
  2. Service Tax Act 2018
  3. Customs Act 1967

• For more details on Sales Tax and Service Tax, please visit https://mysst.customs.gov.my/

• For more details on customs duties, please visit http://www.customs.gov.my/en/pages/main.aspx

• The Sarawak State Sales Tax is administered by the Sarawak State Comptroller while the Sabah Ministry of Finance is responsible for the administration of the Sabah State Sales Tax.

• Investors are further advised to consult their authorised/appointed tax agents on the details and the applicability of various aspects of the Malaysian taxation system.

Petroleum (Income Tax) Act 1967

• Petroleum Income Tax on petroleum operations in Malaysia is governed by the Petroleum (Income Tax) Act 1967 (“PITA”), which imposes tax on the income derived by chargeable person from petroleum operations in Malaysia (including any incidental revenue to the petroleum operations) for each year of assessment.

• The current petroleum income tax is 38%

• A chargeable person is defined in PITA as PETRONAS, Malaysia-Thailand Joint Authority and any other person carrying out petroleum operations in relation to each petroleum agreement.

• Petroleum operations covers activities of searching for and winning or obtaining of petroleum in Malaysia, sale or disposal of such petroleum and transportation within Malaysia of petroleum so won or obtained to any point of sale or delivery or export.

• Petroleum operations do not include transportation of petroleum outside Malaysia, any process of refining or liquefying of petroleum, any dealings with refined or liquified products and service involving supply and use of rigs, derricks, ocean tankers and barges.

Income Tax Act 1967

• Tax on non-petroleum operations is governed under the Income Tax Act 1967 which imposes tax on the income accruing in, or derived from Malaysia, or received in Malaysia from outside the country for each year of assessment.

• Resident companies are taxed at the rate of 24%, except for Small and Medium Enterprises (“SME”) companies which are taxed at 17% only for the first RM6500,000 of chargeable income and any excess of RM6500,000 at the rate of 24%.

• SME is defined as a resident company incorporated in Malaysia with (i) paid-up capital of RM2.5 million or less at the beginning of the basis period (ii) gross income from business of not more than RM50 million for the basis period; (iii) is not controlled, directly or indirectly, by another company that has paid-up capital of more than RM2.5 million.

• Non-resident companies are taxed at a flat rate of 24%.

Sales Tax Act 2018 and Service Tax Act 2018

• Sales Tax and Service Tax (SST) are two separate legislations normally referred to as SST. Effective from 1 September 2018, SST was introduced to replace the Goods and Services Tax (GST).

• Sales Tax is a single-stage tax imposed on prescribed taxable goods manufactured or imported into Malaysia.

• The tax rate for Sales Tax varies (i.e. 5%, 10% or a specific rate).

• Service Tax is a consumption tax levied and charged on prescribed taxable services provided in Malaysia by a registered person or any imported taxable services.

• The tax rate for Service Tax is 6%.

State Sales Tax Ordinance 1998

• The Sarawak State Sales Tax list of taxable goods has been expanded with effect from 1 January 2019 to include certain petroleum products which are crude, condensate, LNG, urea, paraffin wax, kerosene, gas oil, lubricating oils, naphthalene and lubricating greases.

• Sarawak State Sales Tax is applicable on the export of taxable petroleum products out of Sarawak.

• The tax rate for Sarawak State Sales Tax is 5%.

State Sales Tax Enactment 1998

• The Sabah State Sales Tax list of taxable goods has been expanded with effect from 1 April 2020 to include certain petroleum products which are crude, condensate, natural gas and LNG.

• Sabah State Sales Tax is applicable on taxable goods sold or provided by any person who carries on business in the Sabah State.

• Currently, exemption is available on sale of natural gas sold:

   

  • for the purpose of manufacturing into LNG in Sabah.
  • to Sabah Energy Corporation Sdn Bhd.

• The rate for Sabah State Sales Tax is 5%.

Customs Act 1967

• Customs duties such as import and export duty is levied on the import and export of dutiable goods, governed under the Customs Act 1967 and its subsidiary legislations.

• The rate for import duty and export duty differs based on the classification of the products. The rates are set out in the Customs Duties Order 2017. More details: 

• Currently, there are exemptions available under the Customs Duties (Exemption) Order 2017 which includes items listed in the Master Exemption List. More details: 

• Where exemption is not available in the Customs Duties (Exemption) Order 2017, application for exemption could be made to the Minister of Finance under Section 14 of the Customs Act 1967, The application is subject to approval from Minister of Finance.

Stamp Act 1949

• Stamp duty is governed under the Stamp Act 1949.

• Stamp duty is chargeable on certain instruments specified in the First Schedule of the Stamp Act 1949. More details at:  

• There are two (2) types of stamp duty charges namely ad valorem duty and fixed duty at RM10. 

• An instrument is required to be stamped within thirty (30) days of its execution if executed within Malaysia. If the instrument is executed outside Malaysia, it must be stamped within 30 days after it has been first received in Malaysia.