How income tax works in Malaysia
Malaysia income tax applies to income accruing in or derived from Malaysia. Resident individuals are also taxed on foreign-sourced income received in Malaysia, but most foreign-sourced income received by resident individuals is currently exempt from 1 January 2022 to 31 December 2036, subject to conditions.
Resident individuals are taxed using progressive rates from 0% to 30%. Non-residents are generally taxed at 30% on taxable income, with some special rates for specific categories such as interest, royalties and certain services.
Payroll still matters. Employers usually operate monthly tax deduction, and Malaysian employees and permanent residents generally have EPF, SOCSO and EIS costs. Dividend income above RM100,000 from resident companies is also subject to a separate 2% tax, so high-income planning is not just about salary.
Income tax brackets in Malaysia
| Bracket | Rate | Notes |
|---|---|---|
| RM 0 - 5,000 | 0% | Resident individual rate |
| RM 5,001 - 20,000 | 1% | Resident individual rate |
| RM 20,001 - 35,000 | 3% | Resident individual rate |
| RM 35,001 - 50,000 | 6% | Resident individual rate |
| RM 50,001 - 70,000 | 11% | Resident individual rate |
| RM 70,001 - 100,000 | 19% | Resident individual rate |
| RM 100,001 - 400,000 | 25% | Resident individual rate |
| RM 400,001 - 600,000 | 26% | Resident individual rate |
| RM 600,001 - 2,000,000 | 28% | Resident individual rate |
| Over RM 2,000,000 | 30% | Resident individual rate |
Tax rates at a glance
- Resident income tax
- 0% - 30%Progressive
- Non-resident income tax
- 30%
- Dividend tax
- 2%
- Employee EPF
- 11%
- Employer EPF
- 12% - 13%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
ExpatsFoundersEmployeesInvestorsRemote workers
Watch out for
- Malaysia is source-based for many items, but residents can still be taxed on foreign-sourced income received in Malaysia unless a specific exemption applies.
- The monthly payroll picture is not just income tax. EPF, SOCSO and EIS can materially change take-home pay and employer cost.
- Budget 2026 proposed extending the foreign-sourced income exemption window and adding LLP distribution tax at 2%, but those changes still need to be enacted.
Frequently asked questions
Do expats pay income tax in Malaysia?
Yes, if they are taxed on Malaysian-source income or if they are resident and receive taxable foreign-sourced income in Malaysia. Non-residents are usually taxed at 30% on taxable income.
What is the income tax rate in Malaysia?
Resident individuals pay progressive rates from 0% to 30% depending on chargeable income. Non-residents are generally taxed at 30%.
When do I file a Malaysian tax return?
Individuals generally file by 30 April if they have no business income and by 30 June if they do. Malaysia uses self-assessment, so the return is the assessment.