What personal income tax rates apply to business owners in Malaysia?
Resident individuals pay progressive tax from 0% on the first RM5,000 up to 30% on income above RM2 million. Non-residents pay a flat 30%. The rates apply to total chargeable income after reliefs.
Owners who draw salary, fees, dividends or business profit pay personal income tax on their total chargeable income.
Resident individual rates (per PwC):
| Chargeable income (RM) | Rate on the excess |
|---|---|
| 0 to 5,000 | 0% |
| 5,001 to 20,000 | 1% |
| 20,001 to 35,000 | 3% |
| 35,001 to 50,000 | 6% |
| 50,001 to 70,000 | 11% |
| 70,001 to 100,000 | 19% |
| 100,001 to 400,000 | 25% |
| 400,001 to 600,000 | 26% |
| 600,001 to 2,000,000 | 28% |
| Above 2,000,000 | 30% |
Non-residents: 30% flat on total income, with no personal reliefs (the table here is the one PwC shows without a year label; the 0% band on the first RM5,000 is standard).
Residency: an individual is generally resident when present in Malaysia for 182 days or more in the year.
Chargeable income is total income less reliefs (for example for self, spouse, children, EPF, insurance). A rebate may reduce tax for lower-income taxpayers.
Check the exact bands and reliefs for the year you are filing, as budgets change them.
Legal basis
- Income Tax Act 1967, Schedule 1 (individual rates)
- Income Tax Act 1967, s.7
Sources
Applies to YA 2025 · 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
- Who must register for sales tax in Malaysia and what are the rates?Sales tax is charged on taxable goods made in Malaysia by registered manufacturers and on taxable imports. Rates are 5%, 10% or a specific rate; since 1 July 2025, goods not listed in the 5% or specific-rate orders are taxed at 10%. A manufacturer must register once taxable sales exceed RM500,000 in 12 months.
- When does my business have to register for service tax in Malaysia, and at what rate?Service tax is charged on listed taxable services at 8%, except 6% for food and beverage, logistics, telecommunications, parking, construction, private healthcare and private education. Registration depends on the service: RM500,000 in 12 months for rental or leasing and financial services, RM1.5 million for food and beverage, construction and private healthcare, and private schools charging over RM60,000 per student a year.
- What changed in service tax from 1 July 2025?From 1 July 2025 Customs extended service tax to rental or leasing (8%), financial services (8%), beauty treatment (8%), construction (6%), private healthcare (6%) and private education (6%), subject to thresholds and exclusions. Sales tax rates changed on the same date, with unlisted goods taxed at 10%.
- How does real property gains tax (RPGT) work in Malaysia?RPGT is charged on gains from disposing of land, buildings and shares in real property companies. Rates fall with the holding period. For Malaysian citizens and PRs it is 30%, 30%, 20%, 15% in years 1 to 5, and nil from the 6th year. Companies pay 10% from year 6.
- What tax incentives can a Malaysian SME realistically use?Most major incentives, such as pioneer status, investment tax allowance and reinvestment allowance, target manufacturing and approved activities and need approval. Pioneer status exempts 70% of statutory income for five years; reinvestment allowance gives 60% of qualifying spending for established manufacturers.