Short answer. LHDN's published company tax table gives a qualifying SME 15% on the first RM150,000 of chargeable income, 17% up to RM600,000 and 24% on the rest. Other companies pay 24%. That is what the table says as at the date this page was last updated. Two things need care: LHDN's table and its SME page do not say the same thing, and the table's most recent row is not recent. Use this page to see what LHDN publishes. Use the structure comparison to see whether a company is worth it for you.
Every figure comes from LHDN's own pages, linked below. Figures are as at the date this page was last updated (see the byline).
The bands LHDN publishes
LHDN's Tax Rate of Company page lists the rates for a company with paid up capital not more than RM2.5 million and gross business income of not more than RM50 million:
| Slice of chargeable income | Rate |
|---|---|
| First RM150,000 | 15% |
| RM150,001 to RM600,000 | 17% |
| RM600,001 and the subsequent balance | 24% |
| Company other than the SME category | 24% |
Source: LHDN, Tax Rate of Company.
The test has two parts and a company has to meet both. If either the paid up capital or the gross business income is above the limit, the table puts the company in the 24% category.
Where LHDN's two pages differ
LHDN also has a page on SMEs. It states a tax rate of 17% on taxable income up to RM600,000 for a company with paid up capital not more than RM2.5 million and yearly sales value not more than RM50 million. It does not mention the 15% band for the first slice. Anyone who summarises the SME page alone would give a rate that is too high on the first RM150,000.
Two other differences between the pages are worth knowing:
- The table's latest row. The Tax Rate of Company page carries a "Last updated" note of 25/06/2026, but the latest row it shows is for Year Assessment 2023 - 2024. We found no row for a later year on that page. If you need a rate for a later year of assessment, check LHDN directly instead of assuming the 2023 - 2024 row still applies.
- Wording of the second test. The rate table says "gross business income" and the SME page says "yearly sales value". If your company is close to the RM50 million line, ask LHDN or a tax agent which measure applies.
Sources: LHDN, SME and the rate table above.
CP204: estimating your tax
Companies pay tax through monthly instalments based on an estimate they file on Form CP204. LHDN's Tax Estimation page sets the key timing:
| Situation | What LHDN says |
|---|---|
| Company already in operation | Submit the e-CP204 no later than 30 days before the start of the basis period |
| Newly established company | Submit within three (3) months from the date operations begin (first basis period of not less than six months) |
| First instalment, new company | Starting from the 6th month of the basis period |
| Due date of each instalment | The 15th day of the calendar month |
| Minimum estimate | Not less than 85% of the preceding year's revised estimate, or the original estimate if there was no revision. LHDN says this applies only starting from the second year of assessment |
For failing to submit, LHDN says the Director General can set the estimate for you, and prosecution may follow. If convicted, the penalty could be a fine of not less than RM200 and not more than RM20,000, or imprisonment not exceeding six months, or both.
Source: LHDN, Tax Estimation.
Paying yourself: director fees and PCB
If you run your company and pay yourself, LHDN's operational guideline on monthly tax deductions (Garis Panduan Operasi Bil. 1 Tahun 2024) matters. It is in Malay. It lists the types of remuneration subject to PCB, and the list includes director fees (yuran pengarah) alongside salary, wages, bonus and allowances.
The same guideline says a director holding 20% or more of the ordinary shares is jointly and severally liable for PCB that the company does not pay. For an owner-director that is the point: PCB the company withholds and does not hand over to LHDN is your problem too.
Use the PCB calculator to see monthly deductions on a salary, and the income tax calculator for the personal tax side.
EPF, SOCSO and EIS treatment of a director's fee, and their rates, are on KWSP's and PERKESO's own pages.
Source: LHDN Garis Panduan Operasi Bil. 1 Tahun 2024.
What this means for choosing a structure
A company's lower first slice is the attraction, and the table shows it. It is also only one side of the choice: a company brings a secretary, an annual return, beneficial ownership reporting and possibly an audit. Those are covered in the Sdn Bhd registration guide. The alternative, a sole proprietorship or partnership, is taxed through your own return; see the freelancer tax guide.
Whether the business must issue e-invoices is a separate test: see the e-invoice guide. SST is another: see SST registration for small businesses.
This guide is general information, not tax advice.