What is the corporate tax rate for a small company in Malaysia?
A Malaysian resident company normally pays 24% income tax. A company that meets the SME conditions pays 15% on the first RM150,000 of chargeable income, 17% on the next RM450,000 (up to RM600,000), and 24% on anything above that.
Malaysia taxes company profits on a single scale, with a lower tiered scale for qualifying small and medium companies.
Standard rate: 24% of chargeable income for resident companies (and also for non-resident companies).
SME tiered rates: LHDN's rate table shows, for YA 2023 and 2024:
- First RM150,000 of chargeable income: 15%
- RM150,001 to RM600,000: 17%
- Above RM600,000: 24%
PwC's summary shows the same scale for YA 2026. We found no sign of a change in Budget 2026.
Chargeable income is the accounting profit after adding back non-deductible expenses and deducting allowances, exempt income and brought-forward losses.
The tiered scale is not automatic. The company must pass the SME conditions on paid-up capital, gross business income and ownership, tested for each year of assessment. See the separate answers on the conditions and the foreign-ownership rule.
Worked example: chargeable income of RM700,000 gives 15% on RM150,000 (RM22,500), 17% on RM450,000 (RM76,500) and 24% on RM100,000 (RM24,000), a total of RM123,000.
Large multinational groups may also face a 15% top-up tax from 2025, which does not affect ordinary SMEs.
Legal basis
- Income Tax Act 1967, Schedule 1 (rates for resident companies)
Sources
Applies to YA 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- What conditions must my company meet to get the SME tax rates in Malaysia?To use the lower 15%/17% rates, the company must be resident, have ordinary paid-up capital of RM2.5 million or less, and gross business income of RM50 million or less. It must also pass the related-company test and, from YA 2024, a foreign-ownership test.
- Does a dormant company with no income still have to file a tax return in Malaysia?Yes. LHDN says companies that are dormant or have not started business must still register a tax file and file returns. A nil return tells LHDN there is no taxable income, and failing to file can be an offence even when no tax is due.
- What is the Year of Assessment and how does it relate to my financial year?The Year of Assessment (YA) is the calendar year in which your company's accounting year (the basis period) ends. A company with a financial year ending 30 June 2025 reports that income in YA 2025.
- How do I file Form C through MyTax e-Filing?Form C is filed online through LHDN's MyTax portal using the company's tax number and login. You complete the company return, attach no paper, submit, and keep the confirmation. Manual paper submission is no longer accepted for companies.
- What is CP204 and why does my company have to pay tax in instalments?CP204 is the estimate of the tax a company expects to owe for the year, submitted before the year starts. The estimated tax is paid in equal monthly instalments, due on the 15th of each month from the second month, instead of one lump sum after Form C.