In Malaysia, a resident individual is only assessable to income tax on income accruing in or derived from Malaysia. Foreign income that derived from overseas is exempted from income tax.

For a resident, the tax rate will be based on progressive method. The tax rate increases as the income increase. That mean the tax burden is higher for higher income earner.

Income Tax Rates For Resident Individuals with Effect from Year of Assessment 2002

Chargeable Income	RM	Rate	Tax (RM)
On the first	2,500	0%	0
On the next	2,500	1%	25
On the first	5,000	-	25
On the next	5,000	3%	150
On the first	10,000	-	175
On the next	15,000	3%	300
On the first	20,000	-	475
On the next	15,000	7%	1,050
On the first	35,000	-	1,525
On the next	15,000	13%	1,950
On the first	50,000	-	3,475
On the next	20,000	19%	3,800
On the first	70,000	-	7,275
On the next	30,000	24%	7,200
On the first	100,000	-	14,475
On the next	50,000	27%	13,500
On the first	150,000	-	27,975
On the next	100,000	27%	27,000
On the first	250,000	-	54,975
Exceeding	250,000	28%

For a non-resident, there will be a fixed tax rate of 28%.

•Self-assessment requirements for individual taxpayers

The self-assessment system for Malaysian individuals was implemented with effective from the year of assessment 2004.

Under the self-assessment system which is based on the concept of “File and Pay”, individuals are required to:

i) File their completed income tax return form (Form BE/B) to the IRB together with the payments of the balance of tax payable (if any); and

ii) Pay their income tax liabilities through monthly salary deduction (employment income earner) and monthly instalments (business income earner).

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