The Malaysian government has no plans to lower the corporate income tax rate as a means to attract foreign investments, according to the Ministry of Finance (MOF). Instead, the government is focusing on improving tax administration and services to enhance efficiency and provide better support for businesses.
Commitment to Fair and Progressive Taxation
In a written response published on the Senate website, the MOF emphasized that any future studies or reviews on income tax rates must balance economic growth with the nation’s fiscal stability. The government aims to maintain a fair and progressive taxation system that supports both local enterprises and foreign investors without compromising financial sustainability.
Previous Corporate Tax Reductions
Responding to a query from Senator Robert Lau Hui Yew on whether Malaysia would reduce its corporate tax rate, the ministry highlighted that the government had previously lowered the corporate income tax rate from 25% to 24% starting from the 2016 assessment year. Additionally, tax reductions for micro, small, and medium enterprises (MSMEs) have been implemented to boost their competitiveness and drive economic growth.
Competitive Tax Incentives for Businesses
The MOF clarified that despite maintaining the current corporate tax rate, companies in Malaysia effectively pay lower taxes due to various incentives, deductions, exemptions, reliefs, and capital allowances tailored to different industries. These measures ensure that Malaysia remains an attractive destination for investors while supporting sustainable business expansion.
By maintaining a stable corporate tax framework and enhancing tax services, the government is positioning Malaysia as a competitive and business-friendly environment in the region, fostering long-term economic prosperity.
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