CHAPTER 3

COMPANY TAXATION

Learning Outcomes
Meaning of management and control of
company
Calculation of adjusted and statutory
income
Calculation of chargeable income of
business, approved donation
Computation of tax liability

Introduction

1a

A Company is defined under the Income Tax Act, 1967 as a body

corporate and includes any body of persons established with a separate legal
identity by or under the laws of a territory outside Malaysia.
Tax computation of company would then be constructed based on the
audited accounts and additional schedules provided by the company.

Prior to YA 2001, the tax authorities would require the return Form C, tax
computation together with the audited accounts to be submitted for raising an
assessment.

Introduction

1b

Under Self-Assessment, a company is required to submit the

tax return (Form C), within 7 months after closing the company's
year end.
Tax computation and audited accounts are kept by the
company for the inspection of IRB tax audit in future year.

Introduction

1c

Mandatory requirement:
Computation of statutory income for:
Business

Dividends (w.e.f 1.1.2014 (YA 2014) the imputation system was

replaced by a single tier system which all dividends under single tier
system are exempted income)
Interests
Royalties
Rents (with details of properties)

Current year business loss

Withholding tax payment to non-resident
Information on 5 directors and 5 stakeholders who are
controlling the company
5

Liability to tax

1d

Resident company = income accrued or derived in Malaysia

only
Non-resident company = only its Malaysian source income
Offshore income (income from outside Malaysia) is not
exposed to tax

Residential Status

A company carrying a business in Malaysia if at any

time during the calendar year for the year of
assessment, it is managed and controlled in Malaysia.
[Section 8 (1) (b)]
A company is regarded as being managed and
controlled in the place where its directors meetings are
held.

Company Tax Rate

YA2007

YA2008

YA2009 - 2015

YA2016

27%

26%

25%

24%

Company
Company tax
rate

Small and Medium Company (paid up capital RM2.5million)

1st RM500,000

20%

20%

20%

19%

Next

27%

26%

25%

24%

Format Tax Computation for

Company

4a

Company ABC Sdn Bhd

Computation of Tax Payable - YA2015
Net Profit before tax / (Loss)
(-) Non-business income (must stated in
Income Statement)
Dividend
Rental
Royalty
Real Property Gains
Profit on Sales of Fixed Assets
Other income
Gross income from business

xx

xx
xx
xx
xx
xx
xx

(xx)
xx

13

Format Tax Computation for

Company

4b

(cont'd)
Gross income from business
(+) Non-allowable expenses:
Expenses that are not incurred
Capital expenditure
Expenses related to investment income
Section 39 prohibited expenses
Donation (include approved and not approve
institutions)
Religious fees - Business Zakat (rebate)
Traffic illegal (employer or employees)
Secretary fees
Taxation fees
Compound
Loss on disposal of assets

xx
xx
xx
xx
xx

xx
xx
xx
xx
xx
xx
xx

xx
xx

14

Format Tax Computation for

Company

4c

(cont'd)
xx
(-) Double Deduction:
Insurance premium - export or import trading
using local insurance agency
Remuneration of disable worker
R&D (refer double deduction notes)

xx
xx
xx

(xx)

Adjusted Income from business

xx

(+) Balancing Charges

xx

(-) Balancing Allowance

Unabsorbed Capital Allow. (prev.yr...)
Capital Allowance (current year)
Industrial Building Allowance
Statutory Income from business

(xx)
(xx)
(xx)
(xx)

(xx)
xx

15

Format Tax Computation for

Company

4d

(cont'd)
Statutory Income from business

xx

(-) Business loss b/f @ unabsorbed (same

business
(+) Statutory income from others:
Interest and discount
Rental, royalty and premium
Other income (excluded dividend)
Gain on disposal (transferred as a BC/BA)
Aggregate Income

(xx)
-exxx
xx
nil

xx
xx

16

Format Tax Computation for

Company

4e

(cont'd)
Aggregate Income

xx

(-) Current year business loss

(-) Donation for approved institution under

Sect 44(6)
State government (full donations amount)
Public library (restricted to RM20,000)
Other institutions (restricted to 10% of
aggregate income)
(-) Zakat
Business Zakat (restricted to 2.5% of
aggregate income @ Zakat paid (lower)
Chargeable Income

(xx)

xx
xx
xx

xx

(xx)
xx
17

Format Tax Computation for

Company

4f

(cont'd)
Chargeable Income (CI)
TAX PAYABLE:
A. If paid-up capital > RM2.5million
Tax Payable (CI * 25%)

B. If paid-up capital < RM2.5million (SME)

Tax Payable:
First RM500,000 CI * 20%
Next CI * 25%
Tax Payable

xx

------XX
-------

XX
XX
------XX
-------

18

Example:
Syarikat An-Nahl Sdn Bhd is corporate in Malaysia on
2006. The paid up capital is RM3,500,000. The chargeable
income for year assessment 2014 is RM720,000.
Compute tax payable for Syarikat An-Nahl Sdn Bhd for
YA 2014.

Answer

19

Example:
Syarikat An-Nahl Sdn Bhd is corporate in Malaysia on
2005. The paid up capital is RM2,200,000. The chargeable
income for year assessment 2015 is RM680,000.
Compute tax payable for Syarikat An-Nahl Sdn Bhd for
YA 2015.

Answer

20

THANK YOU
Q&A????

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