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Home›Business›Corporate Tax Rates

Corporate Tax Rate Malaysia 2026

Official corporate income tax rates for SME and non-SME companies in Malaysia. Sourced from Lembaga Hasil Dalam Negeri (LHDN) Income Tax Act 1967 + Budget 2024 SME relief.

SME — First RM150k

15%

Budget 2024 tier

SME — RM150k-600k

17%

Standard SME rate

Non-SME / Above RM600k

24%

Corporate standard

SME Corporate Tax Tiers

SME criteria: Paid-up capital ≤ RM2.5 million AND gross business income ≤ RM50 million. Must meet BOTH conditions.

Chargeable Income TrancheRate
First RM150,00015%
RM150,001 – RM600,00017%
Above RM600,00024%

Tax Payable at Common Profit Levels

Chargeable IncomeSME TaxSME Effective %Non-SME (24%)
RM100,000RM15,00015.0%RM24,000
RM250,000RM39,50015.8%RM60,000
RM500,000RM82,00016.4%RM120,000
RM1,000,000RM195,00019.5%RM240,000
RM2,500,000RM555,00022.2%RM600,000

Related

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SSM fees: Sdn Bhd, Enterprise, LLP

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Frequently Asked Questions

What is the corporate tax rate in Malaysia 2026?
SME companies: First RM150,000 @ 15%, RM150,001-RM600,000 @ 17%, above RM600,000 @ 24%. Non-SME companies (paid-up capital > RM2.5m OR gross income > RM50m): flat 24%. The 15% tier for first RM150,000 was introduced in Budget 2024 to reduce SME burden. Source: LHDN / Income Tax Act 1967.
What qualifies as SME for Malaysian corporate tax?
To qualify for SME tax rates, a company must meet BOTH: (1) paid-up ordinary share capital ≤ RM2.5 million at start of basis period, AND (2) gross business income ≤ RM50 million in the basis period. Fail either = treated as non-SME with flat 24%. Additional: the company must not be controlled by another company with paid-up capital > RM2.5m (to prevent group fragmentation).
How much tax does a company with RM500,000 profit pay?
RM500,000 chargeable income for SME: RM150,000 × 15% = RM22,500 + RM350,000 × 17% = RM59,500 = Total RM82,000 tax (effective rate 16.4%). Non-SME pays RM500,000 × 24% = RM120,000 (RM38,000 more). This RM38,000 gap is why maintaining SME status matters.
When is corporate tax due in Malaysia?
Form C (tax return) is due within 7 months after the end of your financial year. Estimated tax (CP204) must be filed 30 days before basis period starts. Monthly tax instalments required based on CP204 estimate. Final balance paid by Form C due date. Penalty for late Form C: 10% of unpaid tax + potential court action.
How to reduce corporate tax legally in Malaysia?
Key strategies: (1) Stay below RM2.5m paid-up to maintain SME status; (2) Claim Capital Allowances on fixed assets (plant, machinery, vehicles); (3) Reinvestment Allowance 60% for manufacturing reinvestment; (4) Approved Donations (restricted to 10% of income); (5) R&D Double Deduction via MIDA; (6) Group Relief for losses across related companies; (7) Time dividends — use RPGT exemption when selling assets. Consult tax agent for specific situation.

Data Source

Rates sourced from Lembaga Hasil Dalam Negeri (LHDN), Income Tax Act 1967 as amended by Budget 2024 (15% tier). Last reviewed: January 2026.

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