Malaysia

Social security contributions

Employees’ Provident Fund (EPF)

The Malaysian EPF is a compulsory pension scheme for all Malaysians. The EPF receives and manages retirement savings, encompassing compulsory contributions by all Malaysian citizens and permanent residents who are working in Malaysia. It is not compulsory for non-Malaysian citizens and non-permanent residents to contribute to the EPF, but they may elect to do so.

Social Security Organisation

Malaysia also has a Social Security Organisation (SOCSO) who administers the Employment Injury Scheme (EIS) and the Invalidity Scheme (IS). SOCSO coverage and protection is limited to Malaysian citizens and permanent residents. A monthly contribution must be made and may fall under one of two categories:

• Both the employer and employee make monthly contributions to EIS and IS. The sum is based on the employee’s monthly wages and is restricted to a maximum of MYR 104.15 for the employer and MYR 29.75 for the employee.
• The employer makes a contribution to EIS only for employees who are not eligible to be covered under the IS, with the amount restricted to a monthly maximum of MYR 74.40. Malaysian employers are required to contribute to SOCSO on a monthly basis for all their employees (including foreign employees). However, the employment or assignment arrangement could impact the applicability of the requirement on the employee. As a result, each case needs to be examined individually to determine the applicability.

Employment Insurance System (EIS)

The EIS provides certain benefits and a re-employment placement programme for insured persons in the event of loss of employment to promote active labour market policies. The EIS covers only Malaysian citizens, permanent residents, and temporary residents.

Both the employer and employee make monthly contributions of 0.2% of employee's wage, restricted to a maximum of MYR 11.90, respectively.

Real property gains tax (RPGT)

RPGT is charged upon gains from disposals of real property or shares in a real property company. See the Other taxes section in the Corporate tax summary. RPGT is imposed on individuals as follows:

Consumption taxes

Sales tax and service tax

Sales tax is generally an ad valorem tax. The ad valorem rates are 5% or 10% depending on the class of goods.

The rate of service tax is 8% for all taxable services except for the following, which are at 6%:

• Provision of food and beverage services.
• Telecommunication services.
• Parking services.
• Logistics services.

Net wealth/worth taxes

There are no net wealth/worth taxes in Malaysia.

Inheritance, estate, and gift taxes

There are no inheritance, estate, or gift taxes in Malaysia.

Property tax

Property tax is levied on the gross annual value of property as determined by the local state authorities.

Luxury and excise duties

Excise duties are imposed on a selected range of goods manufactured and imported into Malaysia. Goods that are subject to excise duty include beer/stout, cider and perry, rice wine, mead, un-denatured ethyl alcohol, brandy, whisky, rum and tafia, gin, cigarettes containing tobacco, motor vehicles, motorcycles, playing cards, and mahjong tiles. See the Other taxes section in the Corporate tax summary for rates and more information.

A high value goods tax is expected to be introduced at the rate of 5% to 10% on certain high-value items, such as jewellery and watches, based on the threshold of price. Details of the effective date has yet to be announced.

Stamp duty

Malaysia imposes stamp duty, which is payable by the buyer/transferee, on chargeable instruments. See the Other taxes section in the Corporate tax summary for rates and more information.