What Business Expenses Can an Online Seller Claim for Tax in Malaysia?

In short: costs of earning the sales are deductible; private spending and equipment are not deducted directly.

Section 33(1) of the Income Tax Act 1967 allows a deduction for outgoings wholly and exclusively incurred in producing gross income. Section 39 lists items that cannot be deducted, including domestic or private expenses and capital expenditure.

Normally deductible for an online seller

• Cost of goods sold, including freight and duty on stock.
• Platform commission and payment fees.
• Advertising and influencer fees.
• Shipping, courier and packaging.
• Domain, hosting, e-commerce subscriptions.
• Wages and freelancer fees, plus employer EPF and SOCSO.
• Bank charges and accounting fees.
• A reasonable share of rent and utilities where part of the home is used only for the business.

Not deductible directly

• Personal living costs.
• Capital items such as a computer, camera or shelving. These are claimed as capital allowances (a tax deduction spread over several years for equipment) instead.
• Fines and penalties (section 39).
• Spending for which no records exist.

Evidence. LHDN can ask for the supporting records for seven years, so keep invoices and statements for each claim.

Borderline items, such as mixed-use vehicles or home office space, depend on the facts and are best reviewed with a tax agent.