2016 LHDN income tax rate
The Prime Minister during recent budget presentation has reiterated its commitment to cut income taxes by between 1% to 3% for the 2015 year of assessment, meaning some 300,000 individual taxpayers will no longer pay income tax.
Under Budget 2015, tax payers with family and income of RM4,000 per month will not have tax liability. Individual income taxes will be restructured whereby the chargeable income subject to the maximum rate will be increased from above RM100,000 to RM400,000.
Effective Year of Assessment 2016 (meaning from 1 January 2015 onwards), the tax rates for individual residents of Malaysia shall be reduced by 1% to 3% as follows:-
KPMG Tax Services Sdn Bhd executive director Datin Pauline Tam said the tax reduction was intended to help alleviate the expected increase in costs due to GST.
“The reduction in income tax to a certain extent would help reduce the effects of GST.”
Tax for non-resident
For non-resident individuals, income tax rate shall be reduced by 1%, from the current 26% to 25%.
Further to the above reduction on tax rates, an additional Special Relief of RM2,000 be given to resident tax payers earning up to RM8,000 per month (or aggregate income of up to RM96,000 per year). With this, the individual shall enjoy additional tax savings up to RM480, depending on the amount of tax payable after taking into account all the deductions. Effective date for this is Year of Assessment 2013 (which means calendar year 1 January 2013 to 31 December 2013).
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