Understanding the corporate tax rate in Malaysia helps businesses plan their finances, manage cash flow, and estimate tax obligations more accurately.
Companies pay corporate tax in Malaysia on their chargeable income, which is calculated after deducting allowable business expenses and tax adjustments.
Malaysia applies a tiered corporate tax rate for SMEs, while most other companies pay a flat standard rate. Knowing which category your business falls under helps you understand how much tax you pay and plan accordingly.
Corporate Tax Rate in Malaysia (Latest Rates)
Based on rates published by LHDN, the current SME rates apply up to the Year of Assessment (YA) 2026. Budget 2027 proposes cutting the first two SME bands by one percentage point each from YA 2027.
SME Corporate Tax Rate Malaysia
| Chargeable Income | YA 2023 to YA 2026 | From YA 2027 (Budget 2027) |
| First RM150,000 | 15% | 14% |
| RM150,001 – RM600,000 | 17% | 16% |
| Above RM600,000 | 24% | 24% |
Standard Corporate Tax Rate Malaysia
| Company Type | Tax Rate |
| Non-SME companies | 24% |
As SMEs make up the majority of corporations in Malaysia, lower tax rates apply to SMEs to support business growth and reinvestment.
Corporate Tax Rate 2025, 2026 and 2027
The rates stay the same for YA 2025 and YA 2026: 24% for most companies, and 15% and 17% on the first two income bands for SMEs. For companies with a 31 December financial year end, the YA 2025 return was due by 31 July 2026, and the YA 2026 return will be due by 31 July 2027.
Budget 2027, tabled on 9 October 2026, proposes lower rates for micro, small and medium enterprises (MSMEs) from YA 2027:
- 14% on the first RM150,000 of chargeable income (down from 15%)
- 16% on RM150,001 to RM600,000 (down from 17%)
- 24% above RM600,000 (unchanged)
The standard rate of 24% for other companies is unchanged. The new rates apply once the Finance Bill is passed. Details are in the Budget 2027 tax measures document, and our Budget 2027 summary for SMEs covers the other changes for businesses.
Who Qualifies for SME Corporate Tax Rates
A company must meet specific eligibility criteria to apply SME corporate tax rates in Malaysia
| Criteria | Requirement |
| Paid-up capital | RM2.5 million or less (or, for a limited liability partnership, capital contributions of RM2.5 million or less) |
| Annual revenue | Not more than RM50 million |
| Ownership | Not controlled by large related companies |
| Business type | Not an investment holding company |
Companies that meet these conditions can benefit from lower tax rates on the first portion of their income.
How to Calculate Corporate Tax in Malaysia
Businesses calculate corporate tax in Malaysia using their chargeable income.
Here’s how the process works in practice:
- Calculate total business income
- Deduct allowable business expenses
- Apply capital allowances and adjustments
- Determine chargeable income
- Apply the relevant corporate tax rate
Businesses can generally deduct allowable expenses such as rent, salaries, utilities, and other operating costs when calculating chargeable income. However, non-allowable expenses, including personal or non-business costs, cannot be deducted. Understanding this distinction helps ensure that corporate tax is calculated accurately.
Accurate accounting and proper documentation help ensure compliance and avoid errors during tax filing.
Example of Corporate Tax Calculation
SME Example
If a qualifying SME earns RM500,000 in chargeable income:
| Income Tier | Tax Rate | Tax Payable |
| First RM150,000 | 15% | RM22,500 |
| Next RM350,000 | 17% | RM59,500 |
| Total Tax Payable | RM82,000 |
Under the proposed Budget 2027 rates from YA 2027, the same SME would pay RM77,000: RM21,000 (14% of the first RM150,000) plus RM56,000 (16% of the next RM350,000). That is RM5,000 less tax a year.
Non-SME Example
If a non-SME company earns RM500,000 in chargeable income:
| Income | Tax Rate | Tax Payable |
| RM500,000 | 24% | RM120,000 |
SMEs pay less tax because Malaysia applies lower rates to early income tiers.
Corporate Tax Rate Malaysia (Historical Changes)
Corporate tax rates in Malaysia have gradually decreased over time, especially for SMEs.
SME Corporate Tax Rate History
| Year of Assessment | Rate Structure |
| 2027 onwards (Budget 2027, proposed) | 14% (first RM150k), 16% (next RM450k), 24% thereafter |
| 2023–2026 | 15% (first RM150k), 17% (next RM450k), 24% thereafter |
| 2020–2022 | 17% (first RM600k), 24% thereafter |
| 2019 | 17% (first RM500k), 24% thereafter |
| 2017–2018 | 18% (first RM500k), 24% thereafter |
| 2016 | 19% (first RM500k), 24% thereafter |
Standard Corporate Tax Rate History
| Period | Tax Rate |
| Current | 24% |
| Pre-2016 | 25%–27% |
These changes show how Malaysia has reduced corporate tax rates to improve competitiveness and support SMEs.
Corporate Tax vs Business Tax in Malaysia
Corporate tax is one of the main forms of business tax in Malaysia, but it is not the only one. Corporate tax applies to a company’s profits, while personal income tax applies to income earned by individuals. Businesses may also be subject to Sales and Service Tax (SST), which applies to certain goods and services depending on the nature of the business. Understanding how these taxes differ helps companies manage compliance more effectively and avoid confusion when handling their tax obligations.
|
FAST CASH
Financing up to RM200,000, with quick 15 minutes approval. Funds disbursed as quickly as 5 days.
|
UNLOCK CASH FLOW
Convert unpaid invoices into immediate cash with a credit line of up to RM1 million.
|
|
QUICK CAPITAL INJECTION
Financing up to RM500,000, rates from 1.0% – 1.5% per month and no collateral required.
|
GROW YOUR MONEY
Returns up to 8% p.a. Low-risk alternative to fixed deposits.
|
How Tax Incentives Affect Tax Rates
Although statutory rates determine how much tax a company should pay, tax incentives can reduce the effective corporate tax rate.
Businesses may benefit from:
- automation and digitalisation incentives
- investment tax allowances
- capital allowances and deductions
These incentives lower taxable income, which reduces the total tax payable. You can learn more about tax incentives in Malaysia for SMEs in our detailed guide.
Corporate Tax Filing Deadline in Malaysia
Companies must submit their corporate tax return (Form C or e-C) within seven months after the end of their financial year. For certain e-Filing submissions, LHDN may allow up to eight months.
For example, if a company’s financial year ends on 31 December, its corporate tax return is generally due by 31 July of the following year.
In addition to filing, companies are also required to submit an estimated tax payable using Form CP204 and make instalment payments throughout the year. Staying on top of these deadlines helps businesses avoid penalties and manage cash flow more effectively.
Corporate Tax Rate Frequently Asked Questions (FAQs)
What is the corporate tax rate in Malaysia?
The standard corporate tax rate in Malaysia is 24%. SMEs may qualify for reduced rates of 15% and 17% on the first RM600,000 of chargeable income up to YA 2026, and 14% and 16% from YA 2027 under the Budget 2027 proposal.
What is the corporate tax rate Malaysia 2025?
For YA 2025, the rates are unchanged: 24% for most companies, and 15% on the first RM150,000 and 17% on RM150,001 to RM600,000 for SMEs.
What is the corporate tax rate Malaysia 2026?
YA 2026 uses the same rates as YA 2025: 24% for most companies, and 15% and 17% for SMEs on the first RM600,000 of chargeable income.
What is the corporate tax rate Malaysia 2027?
Budget 2027 proposes cutting MSME rates to 14% on the first RM150,000 and 16% on RM150,001 to RM600,000 from YA 2027. Income above RM600,000 and the standard rate for other companies stay at 24%.
What is the SME corporate tax rate in Malaysia?
Qualifying SMEs pay 15% on the first RM150,000, 17% up to RM600,000, and 24% above that, up to YA 2026. From YA 2027, Budget 2027 proposes 14% and 16% for the first two bands.
How can businesses reduce corporate tax in Malaysia?
Businesses can reduce corporate tax by claiming allowable expenses, applying capital allowances, and using available tax incentives.
