FAQ:15% FLAT TAX RATE

15% Flat Tax Rate

  • What does the optional 15% Flat Tax Rate mean?
    The 15% Flat Tax Rate is 'optional' as an REP applicant can choose to avail to this benefit or otherwise. For the 15% flat tax rate, it will only benefit those earning RM12,500 or more per month while those earning less than this will eventually end up paying more taxes if they choose this incentive. Once opted for, this 15% Flat Tax Rate will be for a continuous period of 5 years. If an applicant chooses to not avail of this incentive within 2 years (the year of return or the year after), the applicant will not be able to claim this incentive in the future.
  • May I know what is the current tax rate applied to Malaysians?
    Kindly refer to this link for the latest tax rate.
  • How will I know how much income tax I have to pay?

    The tax calculation can be made as follows:
    Example: Your taxable income earned for the year 2011 is RM50,000 at E1.

    E2a: Tax on the first 35,000; 1,525
    E2b: Tax on the remaining 15,000 @ 12% (50,000 - 35,000 = 15,000) 1,800
    E3: Total income tax 3,325
  • What if my actual tax rate is less than 15%?
    You will be tax at your normal tax rate to not more than 15%. Kindly refer to the calculation below for more understanding:Example 1:
    Chargeable income is RM120,000 (Basic salary RM10,000 per month)

    (1) Regular text system*:
    first 100,000 RM14,325.00
    the remaining 20,000 @ 26% RM 5,200.00
    total tax to be paid RM19,525.00
    (2) REP 15% flat tax rate:
    RM120,000 x 15% RM18,000.00

    Example 2: Chargeable income is RM95,000 (monthly basic lower than 15% bracket)

    (1) Regular text system*:
    first 70,000 RM7,125.00
    the remaining 25,000 @ 24% RM 6,000.00
    total tax to be paid RM13,125.00
    (2) REP 15% flat tax rate:
    RM95,000 x 15% RM14,250.00

    * Refer to Kadar Cukai Pendapatan

  • Can I wait until I receive my 1st job offer in Malaysia before I confirm on this part?
    Yes, you may do so. However, it would have to be within the 2 years of validity period.
  • When do I have to pay the taxes on my income?
    Tax deductions are done monthly through employers, in April of every year. Tax payers would have to file their yearly tax submission for the previous year.
  • I am planning to operate my own business. Will this be considered under the ETP? Is the tax concession foregone?
    Successful applicants are able to establish their own business but may not be able to enjoy the 15% flat tax rate if they are drawing a business income. However, if they are drawing an employment income from the business, they will be able to enjoy the incentive.
  • If I pay zakat or fitrah (religious tithes), can I make a claim of set-off against the tax payable? Am I still been consider for 15% flat tax rate?
    Yes, Muslim successful returnees are able to provide for this. They would then have to forward the original receipts to substantiate their claim. The receipts must be in the name of the taxpayer.