The IRS Deductions Blog

Posts Tagged ‘malaysia’

Question: Taxes for Sole Proprietor business in Malaysia?

Hi All,
I have just embarked on a sole proprietor business in Malaysia. I have a few questions which I hope some of the experts out there can help to answer:
1) What are the tax forms that I would need to fill up next year?

2) What are the type of deductions that I can use as my business expenditure? Can I use:
i) Housing loan – I’m using my current house as the business premise
ii) Car loan – I’m using my current car as my business mode of transport (to deliver the goods)
iii) Parking tickets, petrol and tolls – I incur all these costs when i deliver the goods
iv) Entertainment – Once in a while, I will have to take my clients out for dinner.
v) Any other things that’s considered as business expenditure? (Electricity, water bill)?

3) Can I also pay myself EPF (Employee portion, employer portion or both)?
Also, I currently have 2 workers that i’ve employed. How do I pay their EPF or make them pay their taxes?

Thanks in advance for your expert help.

Answer: I don’t really know the details, but the basic idea is that anything related to your business can be deducted(excluding property, plant and equipment).

Property, plant and equipment (PPE) are not considered as allowable expenses. Instead, the relief will be given via something called capital allowance (CA). For instance, if you purchase a motor vehicle for business use, you can claim CA (There are different rates for different PPEs). However, note that buildings are not included under CA. They fall under the Industrial Building Allowance (IBA) instead. I guess your house would not fall under the IBA, thus not deductible (since it is not an industrial building).

If you have purchased your car prior to starting your business, I’m not sure whether CA is allowed or not.

Stuff like parking tickets etc. are deductible (since they relate to your business).

For entertainment, there are different rates. For instance, if you entertain your staff (e.g. family day), it is 100% deductible. For certain parties, the entertainment cost is only 50% deductible. On the other hand, certain entertainment expenses are not deductible. So it really depends. For customers…it should be 50%.

For EPF, you need to make a monthly contribution but I’m not very sure about the procedure. Probably you can take a look at the EPF website.

For employees’ personal taxes and yours as well, depending on their salary, marital status, and number of kids, there is a table (Schedular Tax Deduction – Also known as PCB) which tells you the amount of tax to deduct from their salaries each month(to remit to IRB). You can download that from the IRB website.

Items on Amazon Right Now for Tax Deduction Malaysia:

Trade push reshaping Islamic finance’s regional rivalry

MANAMA, Aug 19 — Arshad Khan, the chief of the Bahrain Financial Exchange, had envisaged a global Islamic trading platform when he set out to work with Malaysia’s stock exchange this year. Though the talks fell through, Khan thinks there may be other partnerships in the future, reflecting a desire to collaborate that could help close an age-old …

Payroll and Human Resource Management System Introduction

A key determinant for setting up a business in a given jurisdiction is the income tax regime in force. In today’s economic environment companies are choosing to set up operations or even transfer their businesses to locations where there are considerable tax benefits. Most businesses are specifically concerned with tax matters that have a direct bearing on their business operations such as corporate tax rates, tax incentives, tax treatment of foreign sourced income and indirect tax rates. In this article, we compare the income tax system of Singapore and Malaysia.

To support entrepreneurship and to help foster growth of SMEs, a newly incorporated company that satisfies the qualifying conditions will enjoy full tax exemption on the first S$100,000 of taxable income for each of the first three tax filing years. Malaysia resident companies on the other hand are subject to a corporate income tax rate of 25%. SMEs with a paid-up capital of RM 2.5 million or less are subject to a corporate income tax rate of 20% for the first RM 500,000 of taxable income and 25% on the remaining taxable income.

In Singapore, income taxes are levied on a territorial principle i.e. companies are taxed on Singapore sourced income. The income sourced overseas and retained outside the country is not taxable. Foreign sourced income (branch profits, dividends, service income, etc.) will be taxed only when it is remitted into Singapore, unless the income was already subjected to taxes in a jurisdiction with headline tax rates of at least 15%. Furthermore, as part of the tax changes announced in the 2009 Budget, there is an expansion of scope in the exemption of foreign sourced income. All foreign sourced income earned or accrued outside Singapore on or before 21 January 2009 will be exempted from tax, if the company remits the foreign sourced income to Singapore during 22 Jan 2009 to 21 Jan 2010.

Malaysia also follows a territorial system of taxation whereby companies are taxed on Malaysia sourced income. Resident companies are exempted from income tax on foreign-sourced income remitted into Malaysia, except companies in the banking, insurance, air or sea transport industries which are taxed on a worldwide basis. Both Singapore and Malaysia follow a single-tier corporate income tax system, which means there is no double-taxation for stakeholders.
Singapore provides various industry-specific and investment related income tax incentives for the following business sectors: financial services industry, fund management industry, global trading sector, shipping and maritime industry, event management industry, e-commerce industry, insurance industry and the processing services sector. A tax treaty between two countries is generally an agreement that specifies how the income earned will be taxed by the authorities of each country when a company is involved in doing business in both countries.

Indirect tax such as VAT or GST is an area of concern for most businesses, as it increases the selling price of goods and services. Although the principles of indirect taxation are very similar all over the world, there are certain significant differences between the VAT or GST rates of various jurisdictions. Goods and Services Tax (GST) is a consumption tax that is levied on the supply of goods and services in Singapore and the import of goods into Singapore. A GST registered company must collect GST tax from its customers for the goods and services rendered by the company and then pay the tax collected to tax authorities. Singapore resident companies must register for GST when the annual turnover is above or expected to be above 1 million SGD.
The GST rate in Singapore stands at 7%. Malaysia currently imposes a service tax and sales tax on certain prescribed goods and services.

A service tax applies to certain prescribed goods and services in Malaysia including food, drinks and tobacco; health services; provision of accommodation and most professional and consultancy services. The rate of service tax is currently fixed at 5%. Given Singapore’s emergence as the best place to business and its attractive income tax rates, more international businesses choose Singapore as their preferred destination for business set-up and expansion.

Items on Amazon Right Now for Schedular Tax Deduction Malaysia:

16. Removal of 20% rebate on STD leads to confusion

PETALING JAYA: The schedular tax deduction system (STD) implemented last year that removes a 20% rebate is among the reasons that could lead to confusion over the tax amount.

Question: federal Tax Deductions–durable medical equipment?

is durable medical equipment (wheelchair copays, etc.) deductible form taxes when prescribed by a doctor

Answer: If you itemize and then if your total allowable medical expenses exceed 7.5% of your adjusted gross income, then yes.

Helen, EA in PA

Items on Amazon Right Now for Doctors Tax Deductions:

Tax Deductions for Professionals $34.99 The only “know how” guide for professionals who want to reduce their tax burden. If you’re ready to hold on to more of your hard-earned money, turn to Tax Deductions for Professionals. Comprehensive, easy to read and filled with interesting examples, the book is organized into practical categories featuring common deductions, including: -start-up and operating expenses -health deductions -…

Numbers perplexing

Pelosi’s and Reid’s health bills increase taxes and place fines on individuals, businesses, insures, and medical device manufactures. They cut Medicare by up to $500 billion over 10 years when enrollments will increase by 30 percent during those years.

Dr. Rand Paul on King World News | Part 3/3