Review of Corporate Income Tax

Reduction of Corporate Income Tax Rate for SMEs 

In an effort to assist business entities to be more competitive in the market, the Government has proposed a reduction of corporate tax rate for SMEs from 19% to 18% on the chargeable income up to RM500,000 for YA 2017.

In addition, the Government has also proposed a reduction of corporate tax rate based on the annual increase in chargeable income for YA 2017 and 2018 as follows:

Chargeable income

(RM)

Existing tax rate

Proposed tax rate

Effective date

SME:

 

 

 

Chargeable income for first RM500,000

19%

18%

From YA 2017

Chargeable income exceeding RM500,000:

 

 

For YAs 2017 & 2018

-       Remaining chargeable income

24%

N/A

 

-       Chargeable income which is equal to the chargeable income of the immediately preceding YA

N/A

24%

 

-       Incremental chargeable income (i.e. the chargeable income in the current YA less chargeable income of the immediately preceding YA)

N/A

20% to 24% depending on the percentage point reduction**

 

 

 

 

 

Non SME

 

 

 

Chargeable income:

 

 

 

-       Chargeable income in the YA

24%

N/A

For YAs 2017 & 2018

-       Chargeable income which is equal to the chargeable income of the immediately preceding YA

N/A

24%

 

-       Incremental chargeable income (i.e. the  chargeable income in the current YA less chargeable income of the immediately preceding YA)

N/A

20% to 24% depending on the percentage point reduction **

 

                                            ** The proposed reduction of the income tax rate as follows:

Percentage of increase in chargeable income as compared to the immediate preceding YA

Percentage point reduction

Income tax rate after reduction (%)

Less than 5.00

Nil

24

5.00 9.99

1

23

10.00 14.99

2

22

15.00 19.99

3

21

20.00 and above

4

20

 

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