Commonly Asked Tax Questions By New Malaysian Business Owners

Death and taxes, the two inevitable dreads we must face.

If you have been employed in a company before, filing income taxes was a breeze with the good people in the finance department. However, for those of us who wish to start a business, the concept of corporate income tax can be daunting. Understandably, here are some pointers to get you started:

What are my tax rates as a new business owner?

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As a business owner, you will be filing for corporate income tax. The rates are based on your chargeable income. For YA 2018, the rates are as such:

First RM 500,000                                                –              18%

On subsequent chargeable income          –              20-24%

Note that if your paid-up capital exceeds RM2.5 million, your rates may differ.

What sort of deductibles are available?

As a small business owner, you are eligible to enjoy deductibles. Below are some items that count for double deduction:

1. Expenditure incurred by companies on the training of employees under an approved training program
2. Expenses incurred in obtaining recognised quality systems, standards and halal certification
3. Childcare allowances given to employees
4. Expenses for Goods and Services Tax (GST) related training of employees in accounting and information, & communication technology
5. Expenditure incurred in participating in career fairs abroad that are endorsed by TalentCorp

Is it compulsory to hire a professional tax accountant?

While it is not compulsory, it is encouraged. Minor and common errors can be penalized. Some common mistakes involve:

1. Incorrectly calculating taxable income
2. Submission of wrong forms
3. Failure to be punctual with installment payments

Is the process of filing corporate income tax similar to the PCB scheme?

The steps required for corporate income tax is not the same as personal tax. Here is a quick overview of the process:

1. Submit form CP204 within the year
2. Pay tax installments for forecast profits
3. Submit income tax return (Form C) within 7 months from the end of the company’s fiscal year
4. Settle all unpaid taxes within 7 months from the end of the company’s financial year
5. Would I still need to pay taxes if my business is not profitable?
6. It is common for businesses to operate on a loss during its’ initial phases. Unless you have taxable expenses, you may not have to pay taxes.

Business losses may be offset against income from all sources in the current year. Any unemployed losses can be carried forward indefinitely.

Actionable takeaway:

Running a small business can be a challenging enterprise. Many new business owners often find themselves in a rut when they are unable to reach their targets. If you would like some wholesome advice on salvaging a business, we have just the article for you.

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