The Startup Taxes You Might Be Liable For In Malaysia
Malaysian start-ups face a variety of taxes that they need to be aware of and plan for. These taxes include income tax, goods and services tax (GST), payroll tax, and stamp duty, among others. In this article, we will discuss these taxes in detail, their implications, and how start-ups can plan to pay them efficiently.
Income Tax
Income tax is a tax levied on the profit that a business earns. In Malaysia, companies are taxed on their taxable income at the corporate tax rate of 24%. This tax is imposed on the profits of companies that have a taxable income of more than RM500,000 per year. Start-ups should be aware of the tax implications of their business operations and plan their finances accordingly to minimize their tax liability.
Goods and Services Tax (GST)
GST is a value-added tax levied on the supply of goods and services in Malaysia. GST was introduced in Malaysia in 2015, but was suspended in 2018. The GST rate in Malaysia is set at 6%. Start-ups that are registered for GST are required to charge GST on their supplies and must also pay GST on the inputs they purchase. Start-ups must also submit regular GST returns and pay the GST collected to the government.
Payroll Tax
Payroll tax is a tax imposed on the salaries and wages that an employer pays to its employees. In Malaysia, the payroll tax rate is set at 12%. Employers must withhold the tax from their employees' salaries and remit the tax to the government. Start-ups should keep in mind the payroll tax implications of hiring employees and plan their finances accordingly.
Stamp Duty
Stamp duty is a tax imposed on various legal documents, such as contracts and deeds. In Malaysia, the stamp duty rate varies depending on the type of document being stamped. For example, the stamp duty rate for a sale and purchase agreement is 1% of the property value. Start-ups that are involved in real estate transactions must be aware of the stamp duty implications and plan their finances accordingly.
Withholding Tax
Withholding tax is a tax imposed on payments made to non-residents, such as royalties and rental income. In Malaysia, the withholding tax rate varies depending on the type of payment being made and the tax treaty between Malaysia and the non-resident's country of residence. Start-ups that make payments to non-residents must be aware of the withholding tax implications and plan their finances accordingly.
Property Tax
Property tax is a tax imposed on the owners of immovable property, such as land and buildings. In Malaysia, the property tax rate varies depending on the type of property and its location. Start-ups that own property must be aware of the property tax implications and plan their finances accordingly.
In conclusion, Malaysian start-ups face a variety of taxes that they need to be aware of and plan for. These taxes include income tax, GST, payroll tax, stamp duty, withholding tax, and property tax. Start-ups should be aware of the tax implications of their business operations and plan their finances accordingly to minimize their tax liability. By taking the time to understand the tax implications of their business operations, start-ups can ensure that they are in compliance with the law and have a sound financial foundation for their future growth.
