No deduction for book depreciation is allowed although capital allowances are granted. Unabsorbed losses may be carried forward indefinitely to offset against future income. Income derived from sources outside Malaysia and remitted by a resident company is not subject to tax, except in the case of banking and insurance business and sea and air transport undertakings. A company is considered a resident in Malaysia if the control and management of its affairs are exercised in Malaysia. Places of control and management are considered on the basis of where meetings of the Board of Directors are held.
All individuals are liable to tax on income accrued in, derived from or remitted to Malaysia.
However, an individual with chargeable income of less than RM 2,500 is taxed at zero rate. Incapacitated children per child RM 5,000 Contributions to the Employees Provident Fund and insurance or takaful premiums for life policies are allowed a maximum total tax relief of RM 5,000. A further tax relief of RM 2,000 is given for insurance or takaful premiums with respect to medical and educational purposes. A married woman whose income is separately assessed generally has her overall tax liability reduced, although this may not always be the case. The separate assessment covers all her income sources.