George Town

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Taxation

Sections

Overview of Taxation in George Town, Malaysia

George Town, the capital of the state of Penang, follows the taxation framework established by the Malaysian federal government, along with some local taxes imposed by the Penang state government and local authorities. The main tax categories relevant to residents, visitors, and businesses include:

1. Income Tax

Overview

  • Residents: Individuals who reside in Malaysia for 183 days or more in a calendar year are considered tax residents and are taxed on their worldwide income.
  • Non-residents: Taxed only on income sourced from Malaysia.

Tax Rates

  • Resident Individuals: Progressive tax rates ranging from 0% to 30% based on income brackets.
    • 0% for income up to RM 5,000
    • 1% to 3% for income between RM 5,001 and RM 20,000
    • 8% to 24% for income between RM 20,001 and RM 100,000
    • 24% to 30% for income above RM 100,000
  • Non-resident Individuals: Flat rate of 30% on income earned in Malaysia.

Filing Procedures

  • Tax Year: The tax year runs from January 1 to December 31.
  • Filing Method: Tax returns can be filed online via the Inland Revenue Board (IRB) website or manually using paper forms.
  • Documents Required: Income statements, tax identification number, and relevant deductions or relief claims.

Deadlines

  • Filing Deadline for Individuals: April 30 of the following year for residents; June 30 for non-residents.

2. Property Tax

Overview

  • Property tax in Malaysia is levied by local authorities, and in George Town, it is managed by the Penang Island City Council (MBPP).

Tax Rates

  • The property tax rate varies based on property type and location. Generally, residential properties are taxed at a lower rate compared to commercial properties.
  • As of 2023, the rates can range from RM 0.04 to RM 0.20 per RM 100 of the annual assessed value.

Filing Procedures

  • Property owners must register their properties with the local council.
  • Annual property tax bills are sent out, and payment can be made online or at designated payment centers.

Deadlines

  • Property tax is typically payable annually, with specific deadlines communicated by the local council.

3. Sales and Service Tax (SST)

Overview

  • The SST is a consumption tax that replaced the Goods and Services Tax (GST) in September 2018.

Tax Rates

  • Sales Tax: Ranges from 5% to 10% on taxable goods.
  • Service Tax: 6% on taxable services, applicable to businesses with annual revenue exceeding RM 500,000.

Filing Procedures

  • Businesses must register for SST with the Royal Malaysian Customs Department.
  • Monthly or quarterly returns must be filed, depending on the business's revenue.

Deadlines

  • Sales tax returns are due on the last day of the month following the taxable period.

4. Local Considerations and Resources

Local Tax Office

  • Inland Revenue Board (IRB) Penang Branch: For income tax-related inquiries and assistance.
  • Penang Island City Council (MBPP): For property tax and local council matters.

Useful Resources

Local Tax Advisory Services

  • Consider consulting local tax professionals or firms for personalized advice, especially for expatriates or businesses unfamiliar with the Malaysian tax system.

Conclusion

Understanding the taxation system in George Town, Malaysia, is crucial for residents, visitors, and businesses. By familiarizing yourself with the various tax categories, rates, filing procedures, and deadlines, you can ensure compliance and make informed financial decisions. For specific inquiries or assistance, local tax offices and advisory services are valuable resources.