Business taxes in Malaysia: calculator for sole proprietors and companies
Choose a sector, a legal form and a tax system, enter your annual revenue and expenses — the calculator shows every tax and contribution, the total and what you keep.
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Legal forms
Sole proprietor (enterprise) Perniagaan milikan tunggal (sole proprietorship, Registration of Businesses Act 1956)
You trade in your own name or under a trade name registered with SSM; there is no separate legal entity and you are personally liable for all business debts. Only Malaysian citizens and permanent residents aged 18 or over can register.
Requirements
Register with SSM (Companies Commission of Malaysia) online via ezBiz within 30 days of starting: RM60 a year with a trade name or RM30 a year with your own name, for 1 to 5 years; renew within 30 days before the registration expires.
Display the registration certificate prominently and a signboard with the business name and number outside the premises; show the name and number on invoices, letterheads and other documents.
File the annual Form B (e-B) by 30 June of the following year (e-Filing has a further 15-day grace period); during the year LHDN may set instalment payments (s. 107B ITA 1967).
Licences and permits are separate from SSM registration: a local authority (PBT) premises or trading licence and permits from the relevant agency if the activity needs them.
e-Invoicing is not required with annual turnover below RM3,000,000; service tax (8%) applies only after RM500,000 of taxable services in 12 months.
Sole proprietorSole proprietorship (enterprise) — income tax at resident individual rates
Profit (revenue minus expenses) is taxed as your income at the resident rates from 0% to 30% after the RM9,000 individual relief; if chargeable income is RM35,000 or less, the tax is reduced by a further RM400 rebate. Malaysia has no simplified (flat or turnover-based) regime for sole proprietors.
Conditions
Available only to Malaysian citizens and permanent residents; a foreigner, even a tax resident, can do business only through a company.
Social security SKSPS (PERKESO): compulsory for passenger transport and, from 1 January 2025, for hawkers and traders licensed by a local authority; the calculator adds the minimum Plan 1 (RM13.10 a month, RM157.20 a year) for services to individuals, trade and manufacturing. For IT and business services it is voluntary.
EPF retirement savings (i-Saraan) are voluntary for the self-employed and are not included.
Service tax 8%: registration is required once taxable services (including IT, consultancy, management) exceed RM500,000 in 12 months; it is not included in the calculation.
Private company (Sdn Bhd) Syarikat Sendirian Berhad (Sdn. Bhd., private company limited by shares, Companies Act 2016)
A separate legal entity registered with SSM; the shareholder is liable only up to the share capital. One person can be the sole shareholder and director, but the director must ordinarily reside in Malaysia and the company secretary must be a citizen or permanent resident.
Requirements
Incorporate with SSM (MyCoID): fee RM1,000; name reservation RM50. You need at least one director aged 18 or over who ordinarily resides in Malaysia and a company secretary who is a citizen or permanent resident and a member of a prescribed body or licensed by SSM.
Annual return to SSM within 30 days of the incorporation anniversary, RM150; financial statements must be circulated to members within 6 months of the financial year end and lodged with SSM within 30 days after that.
An audit is required unless the company meets two of three criteria for the current and previous two years: for 2026 financial years, revenue and total assets up to RM2,000,000 and up to 20 employees (from 2027: RM3,000,000 and 30).
File Form C (e-C) within 7 months after the financial year end (e-Filing has a further 1 month); the CP204 tax estimate is due 30 days before the basis period; a new company with paid-up capital up to RM2,500,000 is exempt from CP204 for its first two years of assessment.
e-Invoicing is not required with annual turnover below RM3,000,000; service tax (8%) and manufacturers' sales tax apply after a RM500,000 threshold over 12 months.
SME tax 15 / 17 / 24% + 2% on dividends above RM100,000
CompanySdn. Bhd. — SME rates (Income Tax Act 1967, Schedule 1 Part I para 2A)
The company pays income tax on profit: 15% on the first RM150,000, 17% on the next RM450,000 and 24% above RM600,000. Dividends are single-tier: up to RM100,000 a year is tax-free and the excess (after the RM9,000 individual relief) is taxed at 2%.
Conditions
SME rates apply only if paid-up capital is RM2,500,000 or less at the start of the year, gross business income is RM50,000,000 or less, and no more than 20% of the capital is owned by foreign companies or by individuals who are not Malaysian citizens. Otherwise the whole profit is taxed at 24% (separate option below).
The 2% dividend tax is paid by the owner through the personal return (there is no withholding); if your chargeable income is RM35,000 or less, the RM400 rebate applies.
The owner takes no salary, so there are no EPF or SOCSO contributions; they would be due on a director's salary.
Service tax 8% applies after RM500,000 of taxable services in 12 months; it is not included in the calculation.
Corporate income tax 24% + 2% on dividends above RM100,000
CompanySdn. Bhd. — standard rate 24% (Income Tax Act 1967, Schedule 1 Part I para 2)
A company that does not meet the SME conditions pays 24% on the whole profit — typically when more than 20% of the capital is owned by individuals who are not Malaysian citizens (for example, a foreign owner). Dividends: up to RM100,000 a year is tax-free and the excess (after the RM9,000 relief) is taxed at 2%.
Conditions
Applies if any SME condition is not met: paid-up capital above RM2,500,000, gross income above RM50,000,000, or more than 20% of the capital held by foreign companies or non-citizens.
The 2% dividend tax is paid by the owner through the personal return; if chargeable income is RM35,000 or less, the RM400 rebate applies.
A foreigner working in their own company needs a separate immigration pass to stay and work — this is outside the calculation.
Software development, IT services, consulting for companies and entrepreneurs.
IT services are taxable services (service tax, Group G 'IT Providers') at 8%: register after RM500,000 in 12 months. Services connected with goods, land or matters outside Malaysia are excluded.
There is no simplified regime: income tax, SME rates and dividend tax are the same for every sector.
SKSPS (PERKESO) is voluntary for IT freelancers: RM13.10 to RM49.40 a month; not included in the calculation.
e-Invoicing is not required with annual turnover below RM3,000,000.
Other business services draft — data being checked
Marketing, design, translation, engineering, bookkeeping and other professional services to companies.
Service tax 8% (Group G): professional consultancy, management (including project management), accounting and audit, engineering and architecture, online platforms; register after RM500,000 in 12 months. Check in MySST whether your service (marketing, design, translation) is on the list.
Income tax, SME rates and dividend tax do not depend on the sector.
SKSPS (PERKESO) covers professional and support services but is voluntary for them; not included in the calculation.
Services to individuals draft — data being checked
Household services, repairs, beauty, tutoring, photography — for private customers.
From 1 July 2025 beauty treatment services (face and body treatments, massage, hair styling, nails, spa, tattooing) are subject to 8% service tax after RM500,000 in 12 months; the same applies to maintenance and repair services (Group G).
You need a local authority (PBT) premises or trading licence; licensed traders must contribute to SKSPS (PERKESO) from 1 January 2025 — the calculator adds the minimum Plan 1: RM157.20 a year.
Income tax, SME rates and dividend tax do not depend on the sector.
Trade in goods draft — data being checked
Retail and wholesale, including an online shop (excluding excise goods).
Sales tax is single-stage: it is charged by the manufacturer or importer; retailers and wholesalers do not charge it. There is no turnover tax for traders.
You need a local authority (PBT) licence; licensed traders must contribute to SKSPS (PERKESO) from 1 January 2025 — the calculator adds the minimum Plan 1: RM157.20 a year.
An online shop is flagged as an 'online seller' when registering with SSM.
e-Invoicing is not required with annual turnover below RM3,000,000.
Manufacturing draft — data being checked
Making and selling your own products: food, furniture, clothing, handmade goods.
A manufacturer of taxable goods registers for sales tax once sales over 12 months exceed RM500,000; the rate is 5%, 10% or a specific rate; some goods are exempt and some manufacturing (e.g. tailoring) is exempt from registration.
Food production: under the Food Act 1983 and the Food Hygiene Regulations 2009, food handlers must attend food handler training and have an anti-typhoid vaccination; a PBT licence is required.
Traders licensed by a PBT must contribute to SKSPS (PERKESO) from 1 January 2025 — the calculator adds the minimum Plan 1: RM157.20 a year.
Assumptions
One owner, tax resident in Malaysia, no employees, no spouse or children, no other income; the business runs for all of 2026 (year of assessment 2026, basis period = calendar year).
Only the automatic RM9,000 individual relief and the RM400 rebate for chargeable income up to RM35,000; voluntary EPF contributions, insurance, zakat and donations are not modelled.
Company: the owner is the sole shareholder and director and takes no salary or director's fee; paid-up capital is RM2,500,000 or less; the financial year is the calendar year; profit after tax is either paid out in full as single-tier dividends in the same year or kept in the company.
Expenses are documented business costs fully deductible in the year they are incurred; capital allowances and prior-year losses are not modelled.
Sales and service tax (SST) is not included: it is passed on to customers and does not reduce profit.
Foreign income is not modelled: Malaysia taxes foreign income only when received in Malaysia, and for individuals such income is exempt until 31 December 2036 subject to conditions.
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