Malaysia company tax guide

Does 19% foreign shareholding qualify for Malaysia's SME tax rate?

The shareholding percentage matters, but it is only one part of the eligibility test. Understand the conditions before finalising your company structure.

The key distinction

A share split is not the whole tax test

For Year of Assessment 2024 onward, more than 20% direct or indirect foreign-company or non-Malaysian-citizen ownership excludes a company from the preferential MSMC tax rate. A 19% / 81% structure may pass this one condition, subject to a full review.

Conditions to review

Incorporated and tax-resident in Malaysia
Paid-up ordinary share capital of RM2.5 million or below
Gross business income of RM50 million or below
Applicable group-company control conditions are met
Foreign and non-citizen ownership is not more than 20%, directly or indirectly

What needs a closer look

The registered shareholding percentage is not always the complete picture. Beneficial ownership, indirect holdings, shareholder rights and group relationships can all be relevant.

Practical approach: confirm the ownership and control position before incorporation, a share issue or a transfer of shares.

For eligible MSMCs

Preferential corporate tax rates

Tax is calculated on chargeable income. The rates below apply only when all statutory eligibility conditions are satisfied.

Chargeable incomeTax rate

First RM150,00015%

Next RM450,000 (RM150,001–RM600,000)17%

Balance above RM600,00024%

Avoid artificial arrangements

Shareholding should reflect the real commercial arrangement and beneficial ownership. Nominee or artificial structures used only to pursue a tax rate can create legal, tax, banking and compliance risk.

Plan your share structure with confidence

Hoong Dai can review your proposed shareholders, directors, beneficial owners, paid-up capital and ongoing company-secretarial requirements before you make a commitment.

Talk to our team