The Enterprise Owner’s Guide To Income Tax In Malaysia (Updated For 2026)
As most entrepreneurs who choose an Enterprise as their business structure do so due to lower costs, an Enterprise owner is more likely to handle their own tax obligations.
As your friendly business consultant, the MISHU team is here to help where we can.
If you’re new to handling income tax returns as an Enterprise owner, this post covers essential information for you to meet your tax obligations in 2026.
Here’s how we’ve broken it down:
- key terms
- tax brackets and marginal rates
- a sweet income tax calculator
- your key tax form
- tax deductions
- filing options and deadlines
Let’s begin.
Note: We use Enterprise throughout the guide for consistency, but they mean the same thing as a Sole Proprietorship, so this guide applies equally to both!
Key Takeaways:
- As an Enterprise handling their own income tax, four key terms to understand are: Chargeable income, marginal tax rates, progressive tax system, and tax deductions.
- Marginal tax rates spread your total chargeable income across lower and higher tax brackets based on their respective limits, resulting in lower total taxes owed.
- Owners need to fill in a specific form called Form B. Here’s a link to the sample Form B in English and sample Form B in Bahasa Melayu.
- The deadline to submit Form B is by 30th June every year. Be careful to make sure you have the latest version of the document!
- To submit online, register for an account on MyTax
- To submit physically, fill out and print the Bahasa Melayu version of Form B according to LHDN printing guidelines and deliver it to their address (find it at the end of the guide).
- Taxes suck – so good luck!
Key terms
Since we had to put this guide together in the first place, we know how annoying it is to come across a new term and have to proceed with an educated (or blind) guess!
So, here are five income tax-related terms you should get familiar with to easily digest this guide.
- Chargeable income
The portion of your income deducting allowable deductions, exemptions, and allowances. This is the part that actually gets taxed. - Tax deductions
Business expenses that can be subtracted from your taxable income, reducing the amount of tax owed. - Tax reliefs
Just like tax deductions but refer to personal expenses that can reduce your taxable income. - Progressive tax system
Higher amounts of chargeable income are subject to a progressive higher tax rate. - Marginal tax rate
This means your total chargeable income is spread across lower and higher tax brackets based on their limits. In plain English, you pay less than a flat rate where you get taxed in a single higher bracket.
With that out of the way, let’s take a look at how income tax gets calculated in Malaysia.
Enterprise income tax treatment
In Malaysia, an Enterprise’s profits are treated as personal income of its owner and therefore subject to personal income tax.
The key term being profits, not revenue – may seem obvious, but we bet a few readers just exhaled in relief!
Anyways, you report your Enterprise profits along with other sources of income, the total sum is tallied, and the amount of tax owed is calculated via LHDN’s marginal income tax rates.
LHDN’s income tax brackets and rates
The following table shows income tax brackets and rates in Malaysia for chargeable income in YA2025 (which you will be paying in 2026).
| Category | Chargeable Income (RM) | Calculations (RM) | Rate (%) | Tax (RM) |
| A | 0 – 5,000 | On the first 5,000 | 0 | 0 |
| B | 5,001 – 20,000 | On the first 5,000 Next 15,000 | 1 | 0 150 |
| C | 20,001 – 35,000 | On the first 20,000 Next 15,000 | 3 | 150 450 |
| D | 35,001 – 50,000 | On the first 35,000 Next 15,000 | 6 | 600 900 |
| E | 50,001 – 70,000 | On the first 50,000 Next 20,000 | 11 | 1,500 2,200 |
| F | 70,001 – 100,000 | On the first 70,000 Next 30,000 | 19 | 3,700 5,700 |
| G | 100,001 – 400,000 | On the first 100,000 Next 300,000 | 25 | 9,400 75,000 |
| H | 400,001 – 600,000 | On the first 400,000 Next 200,000 | 26 | 84,400 52,000 |
| I | 600,001 – 2,000,000 | On the first 600,000 Next 1,400,000 | 28 | 136,400 392,000 |
| J | Exceeding 2,000,000 | On the first 2,000,000 Next ringgit | 30 | 528,400 |
Now let’s look at marginal tax rates in action with a fictional example.
Example of marginal income tax calculation
Meet Ah Keong, a highly successful barber who one day hopes to be a Grand Prix motorcycle champion.
After relevant deductions, let’s say Ah Keong earns a chargeable income of RM150,000. His income spans across Categories A to G, and the calculation works out like this:
- Category A: The first RM5,000 is not taxed – Ah Keong pays nothing.
- Category B: The next RM15,000 is taxed at 1% which comes to RM150. (we’re now at RM20,000)
- Category C: The next R 15,000 is taxed at 3% which comes to RM450. (we’re now at RM35,000)
- Category D: The next RM15,000 is taxed at 8% which comes to RM1,200. (we’re now at RM50,000)
- Category E: The next RM20,000 is taxed at 13% which comes to RM2,600. (we’re now at RM70,000)
- Category F: The next RM30,000 is taxed at 19% which comes to RM5,700. (we’re now at RM100,000)
- Category G: The final RM50,000 is taxed at 25% which comes to RM12,500. (we’re now at RM150,000)
Add them all together and Ah Keong owes LHDN RM21,900 in income tax. Without marginal rates, his RM150,000 would be subject to a flat 24% coming to RM36,000.
There goes his dream of getting a neon green Kawasaki Ninja!
Enterprise tax calculator
Now you understand how marginal tax rates work, skip the manual work and get an instant estimate.
Note this doesn’t account for tax deductibles, which we cover several sections below.
For now, let’s look at income tax documents specific to business owners.
P.S. if your Enterprise income is bumping you into tax brackets above 17%, consider converting your Enterprise into a Sdn Bhd to enjoy lower overall tax. Download our free checklist for a self-assessment!
Key LHDN tax forms
The main form an owner must annually file is called Form B, which is a document specific for residents in Malaysia with business income, and which you can find on the MyTax platform.
The submission deadline is before 30 June of a year, with the e-filing deadline before 15 July (so you have a bit more time if you submit digitally).
The 2025 forms aren’t out yet, but here’s a link to the 2024 Form B in English and in Bahasa Melayu.
Here are official LHDN guides to navigating Form B and properly enter information.
As the official guides are quite lengthy, we recommend reading our guide first, so you’ll go in with some prior knowledge.
Let’s finish up by explaining tax deductions, tax refunds, and how to file your taxes with LHDN.
Tax deductions
Collectively, deductions are the various mechanisms that reduce the overall amount of income tax owed. Here are the different types of deductions you’ll want to take note of.
We don’t think it would do much good to list out all allowable items here, but we’ll provide official links where we can.
Business expenses
Business expenses refer to costs directly incurred in the operation of your Enterprise. This includes items such as:
- rent
- utilities
- office supplies
- employee salaries
- advertising and promotion expenses
- insurance premiums, travel expenses, and
- professional fees
In fact, tax agent services are deductible under professional fees, so you often lose no money and gain a ton of convenience from engaging one!
Donations
Donations made to approved charitable organisations or institutions in cash or approved assets are eligible for tax deductions.
You can find an official list of tax deductible donations on LHDN’s portal here.
Personal reliefs
Since this is personal income tax, you are entitled to personal reliefs which are considered a separate entry from business-related deductions.
Here is the official LHDN list of personal tax reliefs.
Reminder: Allowable deductions change!
This isn’t really something you can memorise overnight, and as the list is ever-evolving, best practice is to visit the official links above or speak to a tax advisor annually.
Your final chargeable income is the amount left over after taking away the various tax deductions and it should go without saying but be sure to maintain proper documentation including receipts, invoices, and payment vouchers to support your claims.
Now on to the last part.
Form B filing options and deadlines
This is something you should memorise overnight: The deadline to submit Form B is June 30th every year.
Submission can be made online or physically.
Online submission
- Register for an account on MyTax.
- Visit LHDN : e-Filing and select e-B.
- Fill in the form and submit.
Physical submission
- Fill out and print the Bahasa Melayu version of Form B according to LHDN printing guidelines.
- Deliver it to LHDN premises at the following address:
Lembaga Hasil Dalam Negeri Malaysia
Seksyen Pengurusan Rekod & Maklumat Percukaian
Jabatan Operasi Cukai
Karung Berkunci 00222
43650 Bandar Baru Bangi
Selangor, Malaysia.
Let MISHU handle your Enterprise tax returns
If your time would be better spent on other areas of your business (or you simply hate doing taxes that much) MISHU’s qualified tax agents and accountants are here to assist you. We provide professional services at affordable prices, with various plans to suit your business needs. Don’t wait for June 30th to get dangerously close – talk to us now!