Salary Tax In Malaysia: How To Calculate Income Tax malaysia
Every individual who earns a salary or income within Malaysia has the obligation and responsibility to pay taxes.
The government can use tax revenue for welfare, development, and education.
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No one can avoid scrutiny by the Malaysian Inland Revenue Board. All income and salaries are subject to auditing.
What Is The Minimum Salary Tax in Malaysia
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The Inland Revenue Board (IRB) has determined that individuals who earn a minimum of RM34000 a year net after deducting the EPF must pay tax.
This means that the monthly salary of an individual income taxpayer must exceed RM2833.33 per month.
This tax is known as income tax. It can be from any source of income that is not limited solely to salary and will be entitled to income tax.
Therefore, individuals that earn the minimum salary ought to declare and pay tax every year.
How Much Minimum Salary Per Month Eligible For Income Tax Malaysia
The income tax rate malaysia 2024 for personal tax and corporate tax are varied. The deduction is according to the tax rate stated by the level of individual and corporate income.
By this, if the income gains are higher, the tax rate will also be increased.
However, the minimum salary for income tax malaysia is RM5000 in monthly net income after EPE deduction, which is equivalent to RM60000 a year.
The total income will be taxable at the tax rate that is applicable to the level of chargeable income.
Thus, there is no fixed amount of salary that is deducted from the income tax.
SOURCE: LHDN
How To Calculate Malaysia Income Tax 2024
Minimum salary for income tax malaysia is RM60000 per year.
However, the individual is also eligible to deduct their income rate with any relief or tax exemption for low tax payments.
Income tax imposed by LHDN is varied according to the monthly and yearly income of individuals.
For example, if your annual income is RM125000 per year, here are the ways to calculate income tax rate 2024;
Formula income tax malaysia calculation: Total income – tax exemption/ relief = Tax payable
According to the percentage rate of tax that must be paid for the assessment year 2022 can be referred on the website https://www.hasil.gov.my
Income tax for income of RM125,000:
- – First RM100,000 = RM10,700
- – RM25,000 X 24% = RM6,000
- – Total tax payment = RM16,700
Are Taxable Income Malaysia High?
Our country, Malaysia, practices a progressive tax system, which means taxes levied on taxpayers will increase if their income increases.
Malaysia has imposed up to a 30% personal income tax rate and a 27% corporate tax rate malaysia on the taxpayers, which is quite high for Malaysians.
This is because some countries with stable economic growth and rich resources will impose a lower income tax on their citizens, for example, Singapore.
However, there are also countries with a higher tax rate compared to Malaysia, for example, Germany, China, Australia, and many more, even though they are developed countries. In a nutshell, it can be concluded that Malaysian taxes are considered high.
It might be a burden to taxpayers with the increasing standard of living.