Tax Obligations by Business Type in Malaysia

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

Why the business type decides your tax workload

Ask five Malaysian business owners what tax they deal with and you will get five different answers, mostly because they run five different structures. The Income Tax Act treats a sole proprietorship, a partnership, an LLP and a company differently, and the difference shows up in which return you file, who is personally liable for the tax, how payments are scheduled and what extra duties follow. This article is a checklist. It lays the obligations side by side so you can see what your structure triggers, and what would change if you switched.

The core comparison

The due dates and exemptions above come from LHDN’s Return Form Filing Programme for 2026, published 30 December 2025 and updated 1 April 2026. Its guide notes say sole proprietorships, partnerships, Hindu joint families and deceased persons’ estates with no employees are exempted from submitting the CP8D, while dormant companies, LLPs, trust bodies and co-operative societies are compulsory filers of Form E and CP8D.

Income tax rates by structure

Individuals and partners are taxed at individual rates (see LHDN’s individual FAQ and income declaration page). We have not reproduced the individual rate table here because we could not confirm the current table on LHDN’s pages at the time of writing, so check LHDN’s individual tax pages for the year you are filing.

For companies, LHDN’s company tax rate page (last updated 25 June 2026) lists, for year of assessment 2023 to 2024:

LHDN’s public ruling PR 8/2025 on micro, small and medium companies also adds a 20% foreign ownership test from year of assessment 2024 and says companies and LLPs can qualify for the preferential rate if they meet the ruling’s criteria, so confirm the conditions in the ruling before assuming the lower bands. See Malaysia corporate tax rate for Sdn Bhd.

LHDN’s company tax page adds that a company return is furnished without attached documents, and its penalties page lists section 112(1) (not returning the return: RM200 to RM20,000 and/or up to 6 months’ imprisonment) and section 113(1) (incorrect information: RM1,000 to RM10,000 plus 200% of tax undercharged).

Taxes and duties beyond income tax

Income tax is only one layer. Three others depend on what the business does rather than how it is constituted.

Employer obligations

If you hire staff you take on payroll duties: monthly tax deduction (PCB), EPF, SOCSO and EIS contributions, and the annual Form E. Contribution rates and wage ceilings are set by the relevant agencies and change, so confirm them with KWSP and PERKESO rather than a blog. See employer payroll obligations and EPF, SOCSO and EIS explained.

Sales and service tax

SST is not tied to structure either. Sales tax applies to manufacturers whose sales pass the threshold set by the Royal Malaysian Customs Department (RM500,000 for manufacturers), and service tax applies to taxable services above the prescribed threshold, at 8% for most services and 6% for food and beverage, logistics, telecommunications and parking. Returns (SST-02) are bimonthly, due by the last day of the following month, and nil returns are still required. Check the MySST portal for current scope. See who must register for SST and SST registration threshold.

E-invoicing

LHDN phased e-invoicing by turnover: from 1 August 2024 for businesses above RM100 million, 1 January 2025 for RM25 million to RM100 million, 1 July 2025 for RM5 million to RM25 million, and 1 January 2026 for those up to RM5 million. Businesses below RM3,000,000 are exempt. Sole proprietors, partnerships and companies are all in scope by turnover, not by structure. See does my Sdn Bhd need e-invoicing and e-invoice exemption.

Company law filings

A Sdn Bhd also has non-tax obligations that interact with tax: annual returns to SSM and financial statements. Section 245 of the Companies Act 2016 requires accounting records to be kept and entries made within sixty days of completing the transaction, and retained for seven years. See annual return vs financial statements.

How to work out what applies to you

1. Write down your structure and the SSM registration number.
2. Register with LHDN if you have no tax reference. LHDN’s e-Daftar page covers individuals, employers, companies, partnerships and LLPs.
3. List your income types: trading, rental, employment, dividends.
4. Count employees, including directors who draw a salary.
5. Test your turnover against SST and e-invoice thresholds.
6. List each return and payment with its source page and due date.
7. Add the dates to a calendar with reminders four weeks ahead.

Illustrative scenarios

These are illustrations, not client cases.

Café run as a sole proprietorship, no staff. The owner files Form B by 30 June, files no Form E because there are no employees, and checks whether service tax at 6% for food and beverage applies at the Customs threshold. E-invoicing depends on turnover; below RM3,000,000 it is exempt.

Three partners running a design studio with two employees. The precedent partner files Form P by 30 June and issues each partner a statement of their share. The partnership also files Form E by 31 March because it has employees, and remits PCB monthly.

Trading Sdn Bhd with ten staff and RM8 million turnover. The company files Form C within 7 months of year end, submits CP204 and pays monthly instalments, files Form E, and falls in the e-invoice phase that began on 1 July 2025 (RM5 million to RM25 million). It also files its SSM annual return.

Common mistakes

• Choosing a structure on tax alone. Liability, contracts and funding matter as much.
• Assuming an LLP is tax-transparent without checking. The rules for LLPs are in LHDN’s rulings; confirm them.
• Forgetting the employer return after the first hire.
• Ignoring turnover thresholds for SST and e-invoicing until a customer asks.
• Paying the owner’s personal costs from a company account without recording them as director’s loans or salary.
• Missing CP204 revisions. Revisions are allowed in months 6, 9 and 11 of the basis period.
• Using last year’s dates. The programme is republished annually.

What changes when you switch structure

Moving from sole proprietorship to a company changes the return (Form B to Form C), introduces the CP204, makes the business a separate taxpayer and adds SSM annual returns and statutory duties. The owner’s salary becomes an employment cost and brings payroll obligations. Partnerships moving to a Sdn Bhd or LLP have to deal with the old business’s final returns. Read sole proprietorship vs Sdn Bhd and choosing a business structure before you decide, and ask whether any capital allowance or stock transfer issues arise on the changeover.

How Axecta helps

Axecta maps the obligations for a business at its current stage, then keeps the calendar. For founders still choosing, we compare structures on the actual numbers (expected profit, staff, turnover) and handle the incorporation if a company fits. See our tax compliance and filing service.

Next steps

1. Identify the row in the core table that matches you.
2. Confirm your LHDN tax number and MyTax login.
3. Add the Form E, SST and e-invoice tests to your list.
4. Review whether your structure still fits next year’s plans.

Frequently asked questions