Malaysia
Top Income Tax
30%
Marginal rate
Corporate Tax
24%
Standard rate
VAT / Sales Tax
8%
Standard rate
Capital Gains
0%
Standard rate
Overview
Malaysia offers a territorial tax system where foreign-source income is generally exempt for residents. The country has one of the lowest costs of living in Southeast Asia with a high standard of infrastructure. Kuala Lumpur is a growing tech hub with excellent connectivity.
Income Tax Brackets
| Income Range (MYR) | Tax Rate |
|---|---|
| 0 - 5,000 | 0% |
| 5,000 - 20,000 | 1% |
| 20,000 - 35,000 | 3% |
| 35,000 - 50,000 | 6% |
| 50,000 - 70,000 | 11% |
| 70,000 - 100,000 | 19% |
| 100,000 - 400,000 | 25% |
| 400,000 - 600,000 | 26% |
| 600,000 - 2,000,000 | 28% |
| 2,000,000+ | 30% |
Foreign-source income exempt for tax residents (territorial system). Being reviewed for potential changes.
Corporate Tax
Standard Rate
24%
Small Business Rate
15%
15% on first MYR 150k for SMEs with paid-up capital under MYR 2.5M. 24% standard.
VAT / Sales Tax
Standard Rate
8%
Sales Tax at 5-10% on goods. Service Tax at 8% on services. No VAT/GST.
Capital Gains Tax
Standard Rate
0%
No capital gains tax on securities. Real property gains tax (RPGT) applies to property disposals.
Social Security Contributions
Employee
11%
Employer
13%
Self-Employed
0%
EPF (Employees Provident Fund). Self-employed can contribute voluntarily.
Special Tax Regimes
Labuan IBFC
3% tax on net profits or flat MYR 20,000 for Labuan trading companies.
Eligibility: Must be a Labuan company conducting offshore trading or non-trading activities.
Malaysia My Second Home (MM2H)
Long-term residency programme with various financial requirements.
Eligibility: Must meet financial requirements including fixed deposits and monthly income proof.
Digital Nomad Visa
DE Rantau Digital Nomad Pass. Must earn at least USD 24,000/year. Valid 3-12 months, renewable.
Pros & Cons
Pros
- Territorial taxation (foreign income exempt)
- No capital gains tax on securities
- Very low cost of living
- Good infrastructure
- English widely spoken
- Digital nomad visa
Cons
- Potential changes to territorial system
- 30% top marginal rate
- Hot and humid climate
- Labuan rules tightening
Living Indicators
Cost of Living Index
Very affordable
Quality of Life Index
Good
Best For
Data Sources
Tax rate data for Malaysia is compiled from the following authoritative sources:
- OECD Tax Database
- Tax Foundation International Tax Competitiveness Index
- World Bank Business Enabling Environment
- Malaysia government tax authority publications
- PwC Worldwide Tax Summaries
Last verified: 2024-01
Disclaimer: This content is for informational purposes only and does not constitute tax advice. Tax laws change frequently. Always consult a qualified tax professional before making decisions about your tax residency or obligations.