LHDN Income Tax for Malaysian SMEs: A Plain-English Starter
If you run a Sdn Bhd in Malaysia, your company pays corporate income tax to LHDN (the Inland Revenue Board) on its profits. Here's the plain-English version for a small business.
The SME tax rates
A resident company that qualifies as an SME pays a reduced rate on its first slice of chargeable income:
A company that doesn't qualify as an SME pays a flat 24%.
Who counts as an SME for this rate?
You generally qualify if your company is resident in Malaysia, has paid-up ordinary share capital of RM2.5 million or less at the start of the year, and annual gross business income of RM50 million or less. There's also a control rule: the low rate is blocked if your company is more than 50% related to a larger company — so a group can't split itself to multiply the low-rate band.
Sole proprietor or partnership instead?
If you're not incorporated, your business profit is taxed as your personal income at individual rates and filed under Form B — not the company rates above. (See our guide on choosing a business structure.)
The deadlines that matter
Miss these and penalties stack up fast, so put them in your calendar.
A few things first-timers get wrong
Looking for funding?
Browse verified Malaysian SME grants and check what you may qualify for.
Source:LHDN (Inland Revenue Board of Malaysia)
General information only — schemes, rules and requirements change. Always follow the official source(s) and confirm the latest details before acting.
Related guides
Bookkeeping & Record-Keeping for Malaysian SMEs
Good records are a legal duty and the foundation of every tax filing, e-invoice and grant claim. What you must keep, for how long, and how to keep it right — without drowning in paperwork.
Company Income Tax for Malaysian SMEs: A Plain Guide
How company tax actually works in Malaysia — the SME preferential rate, the CP204 tax estimate, what counts as deductible, and the filing deadlines every Sdn Bhd must meet with LHDN.
Business Licences & Permits in Malaysia: What Your SME Needs
Registering with SSM makes your business legal — but it does not let you trade at a location. Most SMEs also need a premise licence, a signboard licence, and sometimes sector permits. Here is what each one is and how to get it.