How to File Your Income Tax in Malaysia

One of the things that we often overlook when filing income tax, is that if you’re new to filing taxes, you might have these misconceptions:

• Filing income tax is only for those who earn more than RM XXX annually.
• Filing income tax = Paying tax
• Filing income tax is troublesome and involves a lot of procedures

But that’s not the case!

First of all, filing income tax ≠ paying tax. Thus it’s not something that you only need to do if your “annual income exceeds XXX amount”.

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Who is required to file income tax?

No matter you are self-employed or employed, all income earned in Malaysia, including salary and commission, is taxable. We pay our taxes (cukai, which is tax in Malay) to the Inland Revenue Board of Malaysia (LHDNM – Lembaga Hasil Dalam Negeri Malaysia).

Effective since 2015, the law states that an individual employed in Malaysia that earns an annual employment income of RM34,000 (after EPF deduction) has to register for a tax file.

Who is required to pay taxes?

You will be taxable if your annual income reaches a certain amount. Attached is the income tax rate:

Chargeable Income	Calculation (RM)	Rate( %)	Tax(RM)
0 – 5,000	On the first 5,000	0	0
5,001 – 20,000	On the first 5,000 Next 15,000	1	0 150
20,001 – 35,000	On the first  20,000 Next 15,000	3	150 450
35,001 – 50,000	On the first 35,000 Next 15,000	8	600 1,200
50,001 – 70,000	On the first 50,000 Next 20,000	14	1,800 2,800
70,001 – 100,000	On the first 70,000 Next 30,000	21	4,600 6,300
100,001 – 250,000	On the first 100,000 Next 150,000	24	10,900 36,000
250,001 – 400,000	On the first 250,000 Next 150,000	24.5	46,900 36,750
400,001 – 600,000	On the first 400,000 Next 200,000	25	83,650 50,000
600,001 – 1,000,000	On the first 600,000 Next 400,000	26	133,650 104,000
1,000,001 – 2,000,000	On the first 1,000,000 Next 1,000,000	28	237,650 280,000
Exceeding 2,000,000	On the first 2,000,000 Next ringgit	30	517,650……….

Overwhelmed by the numbers? Don’t worry! With the help of advanced technology, you can always file your tax online.

What’s better? The system will automatically calculate the payable amount for you! 

What is the minimum salary to pay income tax in Malaysia?

Any individual who earns a minimum of RM 34,000 after EPF deductions. It means individuals who earn RM 2,833 per month after EPF deductions from their salary or around RM 3,000 net. The RM 34,000 is not only your income from work, but it should include all of your income into account.

How to file your tax online?

First things first! The due date for submission of Income Tax Returns is:

• Individuals without a business source: On or before 30 April every year
• Individuals with a business source: On or before 30 June every year

There are also some preparations to do in advance:

• Income Tax Reference Number (No Rujukan Cukai) SGXXXXXXX
• e-Filing PIN

You can visit the nearest LHDN office to apply for both.

You can apply online too. Simply go to http://edaftar.hasil.gov.my/ to apply for your Income Tax Reference Number. Click “Online Registration Form” (Borang Pendaftaran Online), fill in your details, and log in to your account.

As for your e-Filing PIN, you can go to LHDN’s website: Feedback>Application. Select e-Filing PIN Number Application.

However, the easiest way is to visit your nearest LHDN branch as the staff can assist you with all the applications.

Note: The Inland Revenue Board of Malaysia (LHDN) website for filing income tax has been revamped! The following instructions and screenshots are based on the latest version of the website.

1. Log in

If this is your first time logging in, please choose ‘Login Kali Pertama’, and then fill in your PIN and identity your identity card (IC) number to complete the first step.

• Step 2: You are required to fill in your basic information, such as D.O.B, address, phone number, e-mail, password, and security questions.
• Step 3: Your name, identity card number, and Income Tax Reference Number will appear on the screen. Click ‘Hantar’ after you confirm your details.
• If the page shows ‘Sijil digital anda telah berjaya didaftar‘, then you can proceed to click Login e-Borang.

2. Choose your tax form

After logging in, you’ll find various tax forms for individuals from different sectors.

Usually, employed individuals will fill up Borang e-BE; self-employed individuals or employers will fill up Borang e-B. If you are a foreigner working in Malaysia, select Borang e-M.

The latest 2023 update of the LHDN website is quite advanced, as you can find the form that you need to fill in at ‘Status Borang E-filing’.

3. Fill in all the details

Next, you’ll see there are different sections in the form. Here, we fill in the ‘Borang e-BE’ for the employed individual.

In ‘Borang e-BE’, we need to fill in

• Personal Details (Maklumat Individu),
• Statutory Income (Pendapatan Berkanun)
• Tax Deduction/Rebate (Pelepasan Cukai/Tolakan Cukai)

*Pro Tip: Keep all the receipts you used for tax deduction/rebate as you might need to show them to the authorities if you were audited.

One good thing about filing your tax online is that the system will calculate the chargeable income and tax relief, showing you only the payable tax!

Now you don’t have to worry that you might get it wrong.

*If you don’t meet the taxable threshold after-tax deduction, the system will show 0 in the payable amount.

1. First, verify your personal details.

2. Verify your tax information. Make sure to key in your bank account details accurately so that you can receive your tax refund (if any) without much trouble

3. This is where you fill in your income! Fill in all the information according to the EA form provided by your company. You need to list down if you have any part-time job or rental income.

4. This is where you fill in the tax relief! Fill in all the details and leave the calculating to the system!

5. Make sure you fill in all the details correctly. On this page, you can view your income, tax relief and the final payable tax (if applicable).

4. Submit

After reviewing your details, click ‘Teruskan’ under ‘Summary’ (Rumusan), then click ‘Tandatangan & Hantar’ and it will bring you to the ‘Pengesahan Penerimaan’ page.

Congratulations, you just finished filing your income tax!

Before signing, you can click ‘Cetak draf’ to download and save your file.

Extra tips: Filing income tax as a foreigner

Foreigners who stay and work in Malaysia for more than 182 days are subject to tax, and they must file and pay their tax to the Inland Revenue Board of Malaysia.

On the other hand, according to the Income Tax Act 1967, only income derived from Malaysia is subject to income tax in Malaysia, while income earned outside Malaysia is not subject to tax. For example, Malaysians working in Singapore will have to file and pay their tax in Singapore; thus there’s no need to file and pay their tax to the Inland Revenue Board of Malaysia.

More details:

• If a foreign company employed the taxpayer and he doesn’t work in Malaysia and only provides services abroad, the income will be considered foreign-sourced. There will be no need for the taxpayer to file and pay the income tax in Malaysia.
• But, if the taxpayer provides services for a foreign company through mobile or internet in Malaysia, indicating that his/her income was derived from Malaysia, then he/she must file and pay the income tax.
• If a Malaysian resident individual uses the foreign-sourced income to buy properties and earn rental income in Malaysia, then he/she must pay the income tax.

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