Malaysia Income Tax Rates 2026: Personal Tax, Corporate Tax, SST and Capital Gains
Updated: 23 October 2026 | Currency: Malaysian ringgit (RM / MYR)
Malaysia taxes individuals and companies under different rules depending on residence, income source and the type of transaction. This guide explains the personal income tax brackets, non-resident treatment, company taxation, sales and service tax, real property gains tax and withholding taxes, and preserves key 2018-2019 historical information.
1. Resident individual income tax rates
Under the Income Tax Act 1967, resident individuals pay progressive income tax on chargeable income, meaning taxable income after allowable deductions and personal reliefs. Only the portion within each bracket is charged at that bracket's marginal rate.
| Chargeable income band (RM) | Marginal rate |
|---|---|
| 0 - 5,000 | 0% |
| 5,001 - 20,000 | 1% |
| 20,001 - 35,000 | 3% |
| 35,001 - 50,000 | 6% |
| 50,001 - 70,000 | 11% |
| 70,001 - 100,000 | 19% |
| 100,001 - 400,000 | 25% |
| 400,001 - 600,000 | 26% |
| 600,001 - 2,000,000 | 28% |
| Over 2,000,000 | 30% |
See the official HASiL individual tax rate information for the schedule applicable to a particular year of assessment.
Tax residence and reliefs
Section 7 of the Income Tax Act 1967 sets out individual tax residence tests. Being present in Malaysia for at least 182 days during the basis year is one common test; additional linked-period and other statutory tests may also establish residence. Nationality alone does not determine tax residence.
Eligible residents may claim reliefs for themselves, qualifying family members, approved contributions and specified expenses subject to the relevant annual limits. Employment expenses must meet the statutory deductibility conditions; personal expenditure is not automatically deductible. Approved donations may qualify under section 44(6) subject to the applicable restrictions. Check the official tax relief guidance.
2. Non-resident individuals and foreign workers
Non-resident individuals are generally subject to a 30% flat income tax rate on taxable Malaysian-source employment and other income to which that rate applies, without the personal reliefs available to residents. Special withholding rates apply to certain types of income. Short-term employment exemptions, including the commonly cited 60-day rule, have conditions and exceptions; a tax treaty may modify the outcome. See HASiL residence guidance and the applicable double taxation agreement.
3. Corporate income tax in Malaysia
Under the Income Tax Act 1967, the general corporate income tax rate is 24%. A qualifying resident small or medium-sized company or limited liability partnership may use tiered rates, subject to paid-up capital, gross business income, ownership and other eligibility conditions.
| Qualifying SME chargeable income | Rate |
|---|---|
| First RM 150,000 | 15% |
| RM 150,001 - RM 600,000 | 17% |
| Amount exceeding RM 600,000 | 24% |
| Other companies (general rate) | 24% |
The SME rate generally requires, among other criteria, paid-up ordinary share capital of not more than RM 2.5 million and gross business income not exceeding RM 50 million, with additional shareholding restrictions. Some businesses, incentives and special sectors have different treatments. Refer to HASiL company taxation and MIDA taxation guidance.
4. Sales and Service Tax (SST) rather than GST
Malaysia's former 6% Goods and Services Tax was reduced to 0% from 1 June 2018 and replaced by the Sales Tax Act 2018 and Service Tax Act 2018 framework from 1 September 2018. Descriptions of GST zero-rated or exempt supplies from 2018 should not be treated as current SST classifications.
Sales tax is generally charged at 5% or 10% on taxable manufactured or imported goods, with specific rates and exemptions depending on classification. Service tax is generally 8% on many taxable services, while certain categories remain at 6% or have special rules. The SST scope was expanded in 2025, and later changes may affect specific categories. See the Royal Malaysian Customs SST portal for the current service lists, rates, thresholds and exemptions.
5. Real Property Gains Tax (RPGT)
The Real Property Gains Tax Act 1976 applies to chargeable gains from disposal of Malaysian real property and certain shares in real property companies. Rates depend on holding period and the seller's classification. The table below describes the broad rules for disposals by Malaysian citizens and permanent residents; exemptions and special cases may apply.
| Holding period | Malaysian citizen / permanent resident |
|---|---|
| Within 3 years | 30% |
| In 4th year | 20% |
| In 5th year | 15% |
| In 6th year and thereafter | 0% |
For companies and non-citizens, different rates can apply, including after five years. RPGT is calculated on chargeable gain, not simply on gross selling price. Check the official RPGT information and relevant schedules to the Act.
Capital gains on unlisted shares
Malaysia also introduced capital gains taxation on certain disposals of unlisted shares by companies, limited liability partnerships, trust bodies and co-operative societies from 2024, with exemptions and transitional rules. This regime is distinct from RPGT and does not mean every private individual's share sale is subject to the same tax. See HASiL guidance and current legislation for the applicable rules.
6. Withholding tax on payments
Malaysian withholding tax depends on the nature of the payment, the recipient's residence and any applicable double taxation agreement. Under the Income Tax Act 1967, common domestic-law withholding rates for payments to non-residents include:
| Payment type | Indicative domestic rate |
|---|---|
| Interest (section 109) | 15%, subject to exemptions or treaty relief |
| Royalties (section 109) | 10%, subject to treaty relief |
| Certain special classes of income (sections 4A and 109B) | 10%, subject to statutory rules and treaty relief |
| Single-tier dividends paid by Malaysian companies | Generally no dividend withholding tax; separate rules can apply to individual dividend income |
Malaysia introduced a 2% tax on specified annual dividend income exceeding RM 100,000 received by individuals from YA 2025, subject to exclusions. It should not be confused with a universal 2% withholding tax on all dividends. Verify the current treatment through HASiL.
7. Excise duty
Malaysia imposes excise duty on specified products under the Excise Act 1976 and subsidiary orders. Categories include tobacco products, alcoholic beverages and motor vehicles, as well as certain other specified goods. Applicable rates vary by product and classification. The Royal Malaysian Customs Department publishes current tariff and excise information.
8. Historical Malaysia tax rates for 2018-2019
The original article concerned the 2018-2019 period. For historical comparison, resident individual marginal rates then ranged from 0% to 28%, with intermediate rates of 1%, 3%, 8%, 14%, 21%, 24%, 24.5%, 25% and 26%. The standard company rate was 24%, and qualifying smaller companies could access a reduced rate on an initial portion of chargeable income. The GST transition to SST occurred during 2018.
Historical tax returns and transactions must be evaluated under the law applicable to their own year of assessment or disposal date, not today's rate table. In particular, the 2018 article's references to a universal 5% RPGT rate after five years and a 28% non-resident rate are not reliable descriptions of current law.
9. Primary legislation and official resources
- Inland Revenue Board of Malaysia (HASiL) - income tax administration, public rulings and guidance
- HASiL personal income tax rates - year-specific tax brackets
- HASiL Real Property Gains Tax - RPGT rules and compliance
- MySST official portal - sales tax and service tax
- Royal Malaysian Customs - excise and customs guidance
- Laws of Malaysia - official legal text repository for the Income Tax Act 1967, RPGT Act 1976, Sales Tax Act 2018 and Service Tax Act 2018
This is a general educational guide. Specific rates and exemptions depend on the year of assessment, taxpayer status and statutory conditions. Consult official guidance or a qualified Malaysian tax adviser before filing or completing a transaction.