Malaysia to slash income tax rates for small businesses by one percentage point

Malaysia's income tax burden on small businesses will lighten under new government measures aimed at supporting the country's MSME sector. The first RM150,000 of chargeable income will now be taxed at 14%, down from the current 15%, while income up to RM600,000 will face a reduced rate of 16% compared to the previous 17%.

The one percentage point reduction across both income brackets represents a targeted approach to ease the tax load on enterprises that form the backbone of Malaysia's economy. The lower-income threshold adjustment provides particular relief to the smallest operators, while the higher bracket supports businesses experiencing moderate growth.

These tax rate cuts are designed to improve cash flow and profitability for MSMEs, potentially enabling reinvestment in operations, workforce expansion, and business development. The measure aligns with broader government efforts to foster entrepreneurship and economic resilience in the small business segment.

The tax changes are expected to benefit hundreds of thousands of registered MSMEs across Malaysia's manufacturing, services, and trading sectors.