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TAXATION

Taxation
Personal taxation
Company taxation
Capital gains tax
Double taxation relief

Personal taxation
Typically levied on all the financial resources of an individual
Income
earned: wages and salaries
unearned: investment income and rent

profits from operating as a sole trader or partner


inherited wealth
investment gains
value of assets held

Often governments also require citizens to pay social security


contributions based on earnings

Practical considerations
Taxing cash flows
Taxing in arrears
Taxing once

Calculating taxable income


Tax-free income
Tax-free expenditure
Income in kind (`fringe' benefits)
Investment income deducted at source
Allowances

Tax rates
Tahun Taksiran 2015

Banjaran Pendapatan
Bercukai
0 - 2500
2,501 - 5,000
5,001 - 10,000
10,001 - 20,000
20,001 - 35,000
35,001 - 50,000
50,001 - 70,000
70,001 - 100,000
100,001 - 150,000
150,001 - 250,000
250,001 - 400,000
Lebih 400,000

Pengiraan (RM)

Kadar %

Cukai(RM)

2,500 pertama
2,500 berikutnya
5,000 pertama
5,000 berikutnya
10,000 pertama
10,000 berikutnya
20,000 pertama
15,000 berikutnya
35,000 pertama
15,000 berikunya
50,000 pertama
20,000 berikutnya
70,000 pertama
30,000 berikutnya
100,000 pertama
50,000 berikutnya
150,000 pertama
100,000 berikutnya
250,000 pertama
150,000 berikutnya
400,000 pertama
setiap ringgit berikutnya

0
0

0
0
0
50
50
100
150
750
900
1,500
2,400
3,200
5,600
6,300
11,900
12,000
23,900
24,000
47,900
36,750
84,650
..........

1
1
5
10
16
21
24
24
24.5
25

Calculating taxable profit


Usually these include both income (less expenses) and capital
gains.
Accounting profit
tax levied on `profit on ordinary activities before taxation'. Calculated

as:

Sales revenue
less Expenses
[Operating profit]
plus Non-trading income (interest, dividends, capital gains)
[Profit before tax and interest]
less Interest paid
[Profit before tax]

Calculating taxable profit


Need to adjust the figure above as tax law's definition of
taxable profits differs from definition of accounting profit
Main adjustments are:
add back any business expenses or potential expenditure shown

in accounts which isn't allowable for tax


Add back any charge for depreciation and instead, subtract
allowable `capital allowance
deduct any special reliefs, e.g., costs R&D costs may be able to be
deducted immediately

Corporate tax rate in Malaysia is 25%

Corporate tax considerations


Some nations provide relief to shareholders to ensure
dividends are not subject to both personal and corporate
income tax
this `imputed' tax system ensures no disadvantage to shareholder

when company distributes profits.

The state may provide incentives to retain and reinvest


earnings
-higher taxes on dividend or
-allowing tax relief for new investment

Capital gains tax


Individuals/companies usually subject to CGT on

`chargeable gains'.
Capital gains on most assets are chargeable. Some

exemptions are:
private motor cars
your primary residence
foreign currency obtained for personal use
British government securities and other qualifying fixed-interest

stocks
Which differ from country to country.

Capital gains tax


Chargeable gain defined as

sales price - purchase cost


Sales price can be reduced by amount of costs

associated with the sale.


Purchase cost can be increased by costs associated with

the purchase plus expenditure to enhance the value of the


asset during the time the asset was held.

Capital gains tax


Some countries have allowances to remove the

component reflecting inflation from any gain, or to


encourage individuals to retain assets.
Capital losses can normally be offset against capital gains
in the same year.
Many nations provide an allowance each year to
individuals - CGT is only paid on chargeable gains over
this sum.
In the UK, individuals are charge 18% tax on capital
gains. Corporations are taxed at their corporate tax rate.

Capital gains tax in Malaysia


There is no capital gains tax for equities in Malaysia. Malaysia used

to have a capital gains tax on real estate but the tax was repealed in
April 2007. However, a real property gains tax (RPGT) introduced in
2010 now applies to property sold less than six years from its
purchase.
Malaysia has imposed capital gain tax on share options and share
purchase plan received by employee starting year 2007.
For who does trading professionally (buying and selling securities
frequently to obtain an income for living) as "traders", this will be
considered income subject to personal income tax rates.
REAL PROPERTY GAINS TAX FOR 2014

Disposed within 3 years


Disposed in 4th year
Disposed in 5th year
Disposed after 5 years

Tax Rates
Personal (citizen & PR)

Company

30%
20%
15%
0%

30%
20%
15%
5%

Other taxes
Other types of tax levied on individuals and companies

include:
stamp duty (on contract documents)
inheritance taxes
property taxes

Taxes may also be levied on expenditure. These may be

with respect to
1.
2.

general expenditure, like a sales tax


specific types of expenditure, like customs duties and excise
taxes

Certain taxes may be targeted at encouraging certain

consumer behaviours or to raise revenue for certain


categories of government expenditure

Double taxation relief


Most nations have double tax agreements with other

countries.
DTR means domestic tax authorities permit companies

and individuals with foreign income to offset the tax paid


overseas against their liability for domestic
corporation/income tax on that income.
DTR is only available on income received from overseas

and not on revenue of a capital nature.

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