Income Tax Act, 1967 (Schedular Tax Deduction)

The Income Tax Act 1967 (ITA) is the principal legislation for taxing income. The general scope encompasses the income of any person accruing in or derived from Malaysia or received in Malaysia from abroad. It is a question of fact as to what constitutes income, that is, gains or profits from a business or employment, dividends, interests, discounts, rents, royalties, premiums, pensions, annuities or other periodical payments, and other gains or profits. Special provisions govern the taxation of income of, for example, insurance companies, shipping and air transport companies, banks and financial institutions, leasing companies, unit trusts and property trusts. Malaysian income tax is imposed on a territorial, not worldwide, basis. Malaysia adopts a territorial system of taxation. Income which is sourced in (ie accrued in or derived from) Malaysia is subject to income tax under the Income Tax Act 1967 (ITA 1967). Presently, Malaysia does not tax capital gains, save for gains derived from the disposal of Malaysian real property or shares in a real property company (RPC). There are indirect taxes in Malaysia including stamp duty, sales tax and service tax. Malaysia does not impose inheritance tax or gift tax. Self-assessment system Malaysia implements a self-assessment system. Under this system, it is the responsibility of the taxpayer to declare his or her income, calculate the tax to be paid, and pay the tax within the prescribed timeline.