In Malaysia, anyone earning personal income are subjected to the Malaysian income tax scheme. This include those who are under employment by companies from both the private and public sectors while for those who have earned dividends and profit from trade too or any sort of profit from economic transactions too would need to pay tax.
Income tax rates in Malaysia varies each year although the variations are not very much and are stipulate under Section 7 of the Malaysia Income Tax Act 1967. It is also provided that for those earning below RM2,500 would not need to pay income tax. Otherwise, individuals would need to pay between 2% to 30% of their annual income after deductions from the tax reliefs allowed. Previously, individuals would need to submit their tax declaration forms where they will have to state their yearly income and all the deductions that they are eligible for. This need to be done before the end of April each year. Once they have done that, any surplus will either be refunded or carried forward. They will need to pay the balance if there are shortages. Individuals now can submit their forms electronically through the E-filing system where calculations and such are automated through the self-assessment system.