2023 Malaysia Tax Law

The Latest Changes to Malaysia’s Tax Laws and How They Affect Your Business – 2023 Edition

Malaysia’s parliament approved the 2023 budget on March 9, 2023, marking the first budget tabled by Prime Minister Anwar Ibrahim since winning the national elections in 2022. The budget, which amounts to 388 billion ringgit (approximately US$86.8 billion), is the largest in Malaysia’s history and aims to promote economic growth and inclusivity through new tax measures. These measures include income tax cuts for middle earners and micro, small, and medium-sized enterprises (MSME), while expanding the tax base among higher-income earners.

The budget also offers improved tax incentives to encourage investment in key industries, such as aerospace, shipbuilding, electric vehicles, and electrical and electronics. Malaysia’s economy is projected to grow by 4.3 percent in 2023, but inflation is expected to range from 2.8 to 3.8 percent, with supply chain disruptions and foreign exchange rates potentially exacerbating the situation.

The Corporate Income Tax

The corporate income tax rate for micro, small, and medium-sized enterprises (MSMEs) in Malaysia will be reduced from 17 to 15 percent for the first 150,000 ringgit (US$33,400) of chargeable income. MSMEs earning between 150,000 ringgit (US$33,400) and up to 600,000 ringgit (US$133,900) on the first chargeable income will be charged at the 17 percent rate, and those earning more than 600,000 ringgit (US$133,900) will be charged the 24 percent tax rate. Additionally, tech-based companies listed on Malaysia’s Access, Certainty, Efficiency (ACE) Market, and MSMEs listed in the Leading Entrepreneur Accelerator Platform (LEAP) Market, will be given a tax deduction of up to 1.5 million ringgit (US$334,700) for the three years for professional fees, placement and brokerage fees, underwriting, and fees to the authorities. The existing tax deduction has been extended for ACE and LEAP listings for a further three years under Malaysia’s Budget 2023.

Individual Income Tax

The proposed Budget 2023 in Malaysia aims to help alleviate the burden of high living costs for individual taxpayers by suggesting a reduction in income tax rates for the following chargeable incomes:


Income Tax Individual

However, for those earning more than 100,000 ringgit (US$22,289), the government has proposed an increase in the income tax rates.

Income Tax Individual - 2

Indirect Tax

The Malaysian government plans to fully exempt import and sales tax on equipment used in carbon capture and storage technology from February 25, 2023, to December 31, 2027.

Tax on Luxury Goods

Malaysia’s Budget for 2023 includes a proposal for a luxury goods tax on specific branded items, such as watches and fashion accessories, starting in 2023. Further details are yet to be disclosed.

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