Malaysia Corporate Tax Rate for Sdn Bhd

By Axecta Management Services, Kuala Lumpur · Last verified: 29 October 2026

The short version

Corporate tax in Malaysia is charged on a company’s chargeable income, not on revenue. The rate that applies depends on whether the company is resident, and whether it qualifies for a reduced rate for small companies. The percentage figures are set in law and revised from time to time, which is why you should check the table for your year of assessment. The table below comes from LHDN’s page.

Standard rate and how it is applied

Resident and non-resident companies are taxed under different provisions. For a resident company the standard corporate rate applies to chargeable income, which is the adjusted profit after allowable deductions and capital allowances. Some income types, such as certain dividends, interest or income from specific activities, may be treated differently.

Reduced rates for small companies

Malaysian law has provided a lower rate on a slice of chargeable income for companies that meet size conditions, such as limits on paid-up capital and on revenue, and conditions about ownership by larger companies. Whether your company qualifies depends on the exact tests in the current legislation. Do not assume a company qualifies because it is small. Check each condition for the basis period, and re-check every year.

Resident versus non-resident companies

Residence for tax purposes is not simply where the company was incorporated. It depends on where management and control is exercised. A Sdn Bhd incorporated in Malaysia is usually resident, but you should test it, particularly where overseas directors make decisions.

Chargeable income versus accounting profit

The tax calculation starts with the profit in the financial statements and adjusts it:

1. Add back expenses that are not deductible. See tax-deductible business expenses.
2. Remove income that is not taxable or is taxed differently.
3. Deduct capital allowances in place of accounting depreciation.
4. Apply available losses and reliefs.
5. The result is the chargeable income to which the rate is applied.

This is why two companies with the same accounting profit can pay different tax.

Where incentives and reliefs fit

Malaysia offers incentives for particular industries, locations and activities, such as pioneer status, investment tax allowances and others. They have eligibility conditions and approval requirements. Claiming them without approval, or after the conditions lapse, is a common problem. Ask your tax adviser before assuming one applies.

A worked example (illustrative only)

Suppose a company has accounting profit of X, non-deductible expenses of Y, and capital allowances of Z. Its chargeable income is X + Y − Z (ignoring other adjustments). The tax is the applicable rate or rates multiplied by that figure. The letters stand in for your numbers. We do not use real figures here because rates change.

How Axecta helps

Axecta’s tax team prepares the tax computation, checks whether reduced rates or incentives apply, and files the return. We also review how the numbers move through the year so there are no surprises when tax falls due. See when corporate tax is payable.

What LHDN’s rate table says

LHDN’s company tax rates page (updated 25 June 2026) shows, for the years of assessment 2023 to 2024:

The page we checked did not carry a separate table for later years of assessment, so confirm the rate for your year of assessment with LHDN, the latest Finance Act or the Budget documents before you use these figures in a forecast.

Who counts as an SME for the lower rates

LHDN’s SME page repeats the paid-up capital and sales conditions, and adds that subsidiaries of large, multinational, government-related or government-owned companies are not considered SMEs. The page also defines SMEs by sector: for manufacturing, sales not more than RM50 million or not more than 200 full-time workers; for services and other sectors, sales not more than RM20 million and not more than 75 full-time workers. Those sector definitions are used for incentives and are a different test from the rate table, so do not mix them up when planning.

From YA 2024, LHDN’s PR 8/2025 adds a foreign-ownership condition (a 20% threshold set out in the ruling) to the preferential rates. Read the ruling for the full test before you rely on the table, particularly if you have foreign or corporate shareholders.

A worked example (illustrative)

Take a qualifying SME with chargeable income of RM800,000, using the YA 2023 to 2024 table above:

• First RM150,000 at 15% = RM22,500
• Next RM450,000 at 17% = RM76,500
• Remaining RM200,000 at 24% = RM48,000
• Total tax = RM147,000

If the same company did not qualify as an SME, 24% on RM800,000 would be RM192,000. The difference shows why the eligibility test matters. The figures are examples that follow the stated table; your own computation must use the correct year’s rates and your adjusted income.

Planning points

• Check paid-up capital and the group structure before every year-end. One related company with larger capital can remove the lower rate.
• Remember that the rate applies to chargeable income, not revenue. See tax-deductible business expenses.
• Use the correct rate when you set your CP204 estimate.

Frequently asked questions