How to Calculate Income Tax in Malaysia

For calculation of your income tax in Malaysia, one has to provide other important information for computation. The calculation of the income tax, firstly depends on whether the individual resides in Malaysia, or is not a resident of the country. The citizenship or resident issue will be kept in mind while computing the income tax in the following ways. The individual will be considered as a tax resident of Malaysia for a year of assessment, in the following situations:

• An individual who usually lives in Malaysia, apart from short trips abroad,
• A permanently residing individual in Malaysia, who has a fixed home in the country,
• An individual who has resided in Malaysia for a time period of 183 days before the year of assessment.
• If these conditions are not met, then the individual is not considered as a resident of Malaysia, for the purpose of calculation of income tax.

Rates of taxation: In situations where the individual is a resident of Malaysia, the calculation of income tax will be based upon the rates and category for the concerned individual. In accordance to the concession of the year of assessment of 2013, a rebate is provided for individuals based on the age.

• 30% rebate for individuals below the age of 60.
• A rebate of 50% for individuals at or above the age of 60.

In cases of an individual who is not a resident of Malaysia, who is earning, the taxation will be 15% or the resident rate will be charged, based on which amount is larger. In case of the director of company, the taxation will be at 20%.
Other factors: Apart from the issue of taxation, the individual also has to ensure certain other information is provided, for calculation of income tax. These include, amount for donation, income from the place of employment, reliefs, rebate for parenthood tax and the rebate based on the year assessment of 2013.
After the calculation for income tax has been completed, a notice of assessment will be received after it has been filled with the Inland Revenue Authority of Malaysia. This is the tax bill which show every detail which an individual needs to keep in mind, like the income subjected to taxation, the required amount of payment, the refunded balance of credit and as well as the deductions.
Specialised accounting services will do their duty of reminding every citizen of Malaysia regarding the stipulated time period and deadline of payment of income tax. In case of individuals who might face problems for calculating their respective income taxes, specialised accounting services provided aids for such individuals. Such organisations provide individual services for calculation of income tax. Citizens on the other hand, should perform their duty of payment of income tax at the correct time.