- You are required to register as a taxpayer if your annual income exceeds RM34,000 (approximately RM2,833.33 per month) after deducting EPF contributions.
- Chargeable income includes various forms of gain, such as business profits, rents, royalties, dividends, and annuities.
- Filing income tax early allows you to thoroughly leverage tax benefits, plan your finances better, and protect yourself from potential fraud, all while avoiding penalties for late submission.
- First-time taxpayers need to register to get their income tax number and one-time PIN to register for e-Filing.
- On the MyTax website, taxpayers can file their tax returns online, and the system will automatically calculate the chargeable income, income tax rates and the final tax amount to pay.
Transitioning to adulthood can be daunting, especially for those new to tax regulations. Our income tax guide in Malaysia is designed to simplify your journey into the world of taxation.
In this article, we delve into the essential steps and procedures for registering as a taxpayer in Malaysia.
From the basics of determining your tax liability to the intricacies of online registration, our guide is your go-to resource for all things related to income tax in Malaysia.
What Is Income Tax in Malaysia?
Income tax in Malaysia is a mandatory tax imposed on individuals based on the income or profits they earn.
If your annual income exceeds RM34,000 (approximately RM2,833.33 per month) after deducting the Employees’ Provident Fund (EPF) contributions, you are obliged to register as a taxpayer.
It’s important to note that income tax isn’t limited to your monthly salary. Your chargeable income includes various forms of gain, such as business profits, rents, royalties, dividends, and annuities.
Malaysia employs a progressive income tax system, meaning that the rate of taxation increases as your income grows. The tax rates vary, with the highest income brackets being taxed up to 30%.
The income tax you pay contributes significantly to Malaysia’s development expenditures, fueling the country’s growth and prosperity.
- e-Filing Taxes in Malaysia
In today’s digital age, filing taxes has become more convenient thanks to the LHDN’s MyTax website, which allows you to file taxes from the comfort of your home or office.
All you need to do is fill in your information as accurately as possible, and the calculations will be done automatically by the system.
The typical window for e-Filing taxes runs from 1st March to 15th May or June every year, depending on your specific category and form.
Why Should You File Your Income Tax Early in Malaysia?
Filing your income taxes early in Malaysia comes with several significant benefits:
1. Eliminate Tax Deadline Stress
By filing your taxes as soon as possible, you can avoid the last-minute rush that can lead to stress and errors.
The early start provides you with ample time to review and claim all applicable tax reliefs, deductions, and rebates.
This approach also reduces the chances of rushing through the process and minimises mistakes.
2. More Time to Plan Out Your Finances
Early filing gives you a clearer picture of your financial obligations well in advance, as you know ahead of time whether you owe taxes or are due for a refund.
If you find out you owe taxes, you won’t need to pay them in full until the filing deadline on 30th April.
This additional time can be crucial for arranging your payments and possibly reducing your tax liability.
3. Faster Tax Refunds
One of the most immediate benefits of filing your taxes early is the possibility of receiving your tax refund sooner.
This quick turnaround is contingent on providing accurate bank details and opting for electronic filing, streamlining the process considerably.
For those using e-Filing, refunds are typically credited directly into bank accounts within 30 days of income declaration.
4. Protect Your Income Tax Returns from Identity Theft
Early filing can also safeguard you from identity theft. Fraudulent tax returns, which aim to misappropriate your refunds, are often filed early in the tax season.
By submitting your tax returns promptly, any fraudulent attempts made in your name are likely to be rejected by the Inland Revenue Board Malaysia (IRBM), securing your rightful refund.
It’s also essential to keep your income tax details private and confidential to further reduce the risk of identity theft.
5. Avoid Paying Penalty
You will be subject to a fine if you miss the deadline on 30th April or 15th May. Last-minute filings can also lead to rushed mistakes, such as overclaiming reliefs, overlooking potential tax reliefs, or inaccurately claiming deductions.
Additionally, gathering necessary documents and receipts for tax relief might take time, and any error or omission can be costly.
Income Tax Guide Malaysia: How to Register
Here’s a step-by-step income tax guide for first-time taxpayers and those looking to register for e-Filing.
1. First-Time Taxpayers
If you’re a first-time taxpayer, registration is essential before you can file taxes online. You will need:
- An income tax number
- A one-time PIN for e-Filing registration
- To register as a taxpayer, you can register online or by visiting the nearest LHDN office.
In-Person Registration at LHDN Office:
- Prepare a copy of your MyKad (or equivalent), your latest salary slip (EA/EC slip), and your marriage certificate (if applicable).
- The staff at the LHDN office will assist you with the registration and provide swift confirmation of your registration.
Make sure to have a scanned copy of your MyKad ready.
- Visit the MyTax website, click on e-Daftar, and fill in the required information across up to 10 sections, including basic particulars and other personal details.
- After submitting the form, you will either get immediate approval and receive your income tax number or an acknowledgement receipt with an application number.
- If it’s the latter, expect your income tax number to be emailed within three working days.
- You can check your application status through e-Daftar or by contacting the LHDN office.
2. Registering for e-Filing Account
Now that you’re a registered taxpayer, it’s time to set up your e-Filing account. This is where you’ll get your:
- Digital certificate
- One-time PIN
- Visit the MyTax website and enter your IC number to start setting up your MyTax account.
- You can choose between two application methods: e-CP55D or e-KYC.
- Clicking on the e-CP55D will lead you to a confirmation page for your email address and personal details. Review and amend them, if necessary, before clicking submit.
- You’ll receive an activation link via email. Click on it to be redirected to the MyTax website, where your PIN number will be displayed.
- Fill in your IC number and other details, and click submit.
- Once you are done, you can log in to MyTax again to access the dashboard and the e-Filing service.
How Bluebricks Can Help First-Time Tax Payers in Malaysia
With the steps above, first-time taxpayers in Malaysia can smoothly navigate the process of registering as a taxpayer and setting up their e-filing account.
Besides our income tax guide in Malaysia, Bluebricks, a reputable bank loan and debt consolidation company, offers comprehensive services to help manage your finances.
We offer a broad range of solutions, including:
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Professional Loan Consultancy Services
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Our loan specialists consider several factors, including:
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- Your CTOS score (such as your credit score and credit history).
Income Tax Guide Malaysia – FAQs
It can be overwhelming for those filing taxes for the first time, so we hope our income tax guide in Malaysia helped to clarify some of your doubts.
Here are some frequently asked questions we have compiled:
You need to pay income tax in Malaysia if your annual income exceeds RM34,000 (after EPF deduction). This includes your salary, business profits, and other forms of income.
You will be charged a 10% penalty on your unpaid tax balance after the deadline (30th April or 15th May).
However, you can submit a written appeal to the nearest LHDN branch within 30 days of the statement of account issuance.
Malaysian taxpayers can claim various tax reliefs such as medical expenses, education fees, lifestyle purchases (books, sports equipment, etc.), child relief, and insurance premiums.
The specific reliefs and amounts can change annually, so it is advised to check the latest guidelines from LHDN for the respective year of assessment.
To rectify any mistakes on a form submitted either manually or online, you should compose a letter explaining the error and attach relevant documents, such as purchase receipts and invoices, to substantiate your claim.
This letter and supporting documents should be submitted to the LDHN office responsible for managing your tax file, or via the LHDN Customer Feedback Portal.
You can also amend your errors online through the e-Filing system before the deadline (15th May). Head to your MyTax dashboard and click ‘e-Application for Amended BE’. Fill in the form and submit it.