IMF: Recommendations to Improve Malaysia's Tax System

Updated on Thursday 08th June 2017

IMF: Recommendations to Improve Malaysia's Tax System Image
The International Monetary Fund released a set of recommendations for Malaysia, as far as its taxes and international tax avoidance rules are concerned. Experts believe that the country could rethink its goods and services tax and increase compliance. A more efficient taxation system could be achieved by changing some tax rates and enhancing the existing investment incentives. Our lawyers in Malaysia can give you details about the proposed recommendations and the current tax system in Malaysia.

Tax recommendations from the IMF

The International Monetary Fund (IMF) expressed its opinion on how Malaysia could rethink its taxation system. The specialists at IMF believe that the country could increase the goods and services tax by as little as 0.5 percent. This change was recommended because it would lead to a revenue increase (of about 0.25 percent of the GDP).

Moreover, IMF believes that the country could make its investment tax incentives more efficient, thus retaining its attractiveness for foreign investors

The current Malaysian tax regime

The current goods and services tax in Malaysia is 6% and the registration threshold for this tax is 500,000 MYR. Companies in Malaysia are also required to pay corporate income tax, at a rate of 24%, with a lower rate for medium-sized companies (calculated according to the paid-up capital and other criteria). Companies also pay a payroll tax, real property tax, stamp duty, social security and withholding taxes on interest and royalties. Malaysia does not have a withholding tax on dividends.

One of the tax experts at our law firm in Malaysia can give you detailed information on the taxation regime and the laws applicable to foreign companies, including the double tax treaties signed with other countries.

Malaysian authorities already announced that the corporate income tax will change, with the purpose of improving investment conditions for small and medium companies. 

To find out more about tax law changes in the country please do not hesitate to contact our lawyers in Malaysia