Company tax at 24% or the SME tiered scale.
Corporate tax
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Effective rate
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SME eligibility
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Your breakdown
Updates live as you type| Slice of profit | Rate | Tax |
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Two rate paths for a Sdn Bhd
A Malaysian company pays income tax on its chargeable profit by one of two paths, and this tool lets you toggle between them. The standard path is a flat rate the calculator applies at 24 percent on every ringgit of chargeable income. The SME path is a tiered scale aimed at smaller resident companies: a lower rate on the first slice of profit, a middle rate on the next slice, and the standard rate above that. For a young, profitable Sdn Bhd, the difference between these two paths can be tens of thousands of ringgit a year, which is why getting the toggle right matters as much as getting the profit figure right.
Chargeable income is the input, and it is not the same as revenue or even accounting profit. It is taxable income after allowable deductions and capital allowances. Feed the tool your tax-adjusted figure, not your top-line sales, or the result will be far too high.
The tests that decide which path
You do not simply choose the SME scale; you have to qualify for it. The tool checks the two main thresholds. Your paid-up ordinary share capital must be at or below RM2.5 million at the start of the basis period, and your annual gross business income must be at or below RM50 million. The calculator flags whether your paid-up capital and gross income figures clear both tests. There is a further condition the tool cannot see, a limit on foreign or corporate ownership of the company, which can disqualify an otherwise small company. The RM2.5 million and RM50 million figures, and the tier rates, are the thresholds this calculator applies for the modelled year; verify the current tests and rates with LHDN (the Inland Revenue Board of Malaysia), since these have been tightened in recent budgets.
RM500,000 of profit under both rates
Take RM500,000 of chargeable income for a qualifying SME. The tiered scale charges 15 percent on the first RM150,000, which is RM22,500, then 17 percent on the next RM350,000 up to the RM600,000 ceiling, which is RM59,500. Add them and the tax is RM82,000, an effective rate of 16.4 percent. Now flip the toggle to non-SME: the flat 24 percent on RM500,000 is RM120,000. Qualifying for the SME scale saves this company RM38,000 on the same profit. The chart sets the two side by side.
The gotcha that disqualifies the low tier
The mistake that catches growing companies is assuming SME status is permanent. It is tested against the thresholds, and a company that crosses RM2.5 million in paid-up capital, perhaps after a funding round that issues new shares, loses the tiered rate and jumps to the flat 24 percent on all its profit. The same happens if gross business income runs past RM50 million. There is also the ownership condition: if a company that is at least partly owned by another company or by foreign shareholders beyond the allowed limit, it can fall out of the SME definition regardless of its size. A practical tip before you raise capital or restructure shareholding, model the tax under the flat rate too, because the structure decision can quietly add a 24 percent rate to your whole profit. When the eligibility flag in this tool says you do not meet the tests, switch the toggle to non-SME to see the real bill.
Is corporate tax charged on revenue or profit?
On chargeable income, which is profit after allowable business deductions and capital allowances, not on revenue. A company with RM5 million in sales but RM500,000 of chargeable profit is taxed on the RM500,000. Enter the tax-adjusted profit figure your accountant computes, since accounting profit and chargeable income differ once non-deductible items and allowances are taken into account.
Does this tool include the dividend tax shareholders pay?
No. This calculates the company's own income tax only. Separately, from Year of Assessment 2025, an individual shareholder pays a 2 percent tax on dividend income above RM100,000 a year, on the excess. So profit can be taxed once in the company and, for large dividend recipients, touched again in the individual's hands. Confirm the dividend tax threshold with LHDN, as it is a recent measure.