In the future, the development of Malaysia's crypto market is expected to further evolve towards "deepening compliance and regional coordination".
Author: FinTax Research
Contents
Toggle1. Malaysia's Basic Tax Collection System Overview
1.1 Malaysia's Tax System
Malaysia's tax types are divided into direct and indirect taxes. Direct taxes include: income tax, real estate surplus tax, and petroleum income tax; indirect taxes include: domestic tax, customs and import/export taxes, sales tax, service tax, and stamp duty. At the same time, Malaysia implements a tax-sharing system between federal and local governments, with the federal government managing national taxation and responsible for formulating tax policies, which are implemented by the Inland Revenue Board and Royal Customs Department. The Inland Revenue Board is mainly responsible for direct taxes, such as income tax and petroleum tax; while the Royal Customs Department is responsible for indirect taxes, including domestic tax, customs, import/export taxes, sales tax, service tax, and stamp duty. State governments collect land tax, mineral tax, forest tax, license tax, entertainment tax, hotel tax, and house number tax.
1.2 Main Tax Categories
1.2.1 Corporate Income Tax
Companies registered in Malaysia should pay income tax on all their income. For local Malaysian companies with paid-up capital of 2.5 million Malaysian ringgit or less, the tax rate is 15% for the first 150,000 Malaysian ringgit, 17% for the portion between 150,000 and 600,000, and then the standard tax rate of 24% applies; for local Malaysian companies with paid-up capital over 2.5 million Malaysian ringgit, the tax rate is 24%; foreign companies have a uniform tax rate of 24%.
1.2.2 Personal Income Tax
Residents' income earned in Malaysia, income remitted from overseas, and non-residents' income earned while working in Malaysia are all subject to income tax. Malaysia's personal income tax rate is 0%-30%, with a 0% rate for income up to 5,000 Malaysian ringgit, and a 30% rate for portions exceeding 2 million Malaysian ringgit. The tax rate for foreign citizens is fixed at 30%.
1.2.3 Withholding Tax
Withholding tax is directly withheld and paid to the tax authority by payers in Malaysia. Non-local companies or individuals should pay withholding tax: 10% for special income (use of movable property, technical services, provision of plant and machinery installation services, etc.); 15% for interest; contract fees: 10% for contractors, 3% for employees; 10% for commissions, guarantees, intermediary fees, etc. Withholding tax rates vary among countries according to double taxation agreements between the Malaysian government and the recipient's country of origin.
1.2.4 Real Estate Profit Tax
Real estate profit tax applies to the sale of land and any property rights, options, or other land-related rights in Malaysia. This includes gains from selling real estate company shares. Tax rates are: 30% if sold within 3 years of purchase; 20% and 15% if sold in the 4th and 5th years respectively; 5% if sold in the 6th year or later.
1.2.5 Import and Export Taxes
Most imported goods in Malaysia are subject to import taxes, with rates based on ad valorem and specific tax rates. Malaysia implements preferential tariffs with ASEAN countries, with industrial product import tax rates between 0-5%; import taxes under bilateral free trade agreements with Japan; import taxes under regional free trade agreements with China-ASEAN and Korea-ASEAN; and a free trade agreement with Australia, under which Malaysia will reduce tariffs by over 97% on imported goods from Australia.
Malaysia levies export taxes on resource-based products including crude oil, raw timber, sawn timber, and crude palm oil. Ad valorem export tax rates range from 0 to 20%.
[The rest of the translation continues in the same professional and accurate manner, maintaining the technical language and specific terminology related to cryptocurrency taxation in Malaysia.]In 2020, the Securities Commission (SC) released a more systematic Guidelines on Digital Assets, which detailed: application conditions for Initial Coin Offerings (ICO), fund usage, investor thresholds; compliance requirements for Digital Asset Exchanges (DAX), such as Know Your Customer (KYC), investor protection, and technical guarantees; and specific standards for information disclosure, internal control, and compliance reporting for operators. This guideline filled many regulatory gaps, providing legal basis for token issuance and platform operations with strong enforceability.
In 2021-2022, Malaysian regulatory authorities focused on platform compliance and alignment with international standards. The SC strengthened enforcement against unauthorized crypto platforms, frequently releasing Investor Alert Lists to warn users against trading on unregistered platforms. Simultaneously, it collaborated with international regulatory organizations like IOSCO and FATF to research and evaluate emerging asset forms such as DeFi, stablecoins, and Non-Fungible Tokens (NFT), maintaining a cautious approach without immediate prohibition.
On August 19, 2024, the Malaysian Securities Commission (SC) revised the Digital Assets Guidelines. This update clarified the status of digital currencies as securities under the Capital Markets and Services Act, and detailed requirements for fundraising through ICO and Initial Exchange Offerings (IEO), as well as operational norms for digital asset custody services.
4. Summary and Outlook
The Malaysian government has adopted a cautious and progressive strategy in cryptocurrency regulation and taxation, emphasizing innovation space while ensuring financial system stability and investor safety. Through the Securities Commission and National Bank, Malaysia has gradually established a clear crypto regulatory framework, incorporating digital assets with securities nature under the Capital Markets and Services Act, requiring crypto trading platforms to obtain licenses and strictly fulfill anti-money laundering (AML/CFT) obligations. The Digital Assets Guidelines provide specific legal basis and operational standards for ICO, IEO, and digital asset trading activities, promoting compliance in the crypto market.
In terms of taxation, although Malaysia has not yet imposed capital gains tax on cryptocurrencies, tax authorities have clearly stated that individuals or enterprises involved in active trading, crypto compensation, mining, and other profit-making activities must include related earnings in income tax declarations. This "usage-oriented" taxation method maintains tax base while providing policy buffer for long-term holders, preserving market flexibility and attractiveness.
As cryptocurrency acceptance increases in Malaysia, with compliant platforms like Luno and Tokenize experiencing continuous user growth, the market shows steady expansion. Simultaneously, regulators have begun focusing on emerging forms like Non-Fungible Tokens (NFT), stablecoins, and DeFi, participating in regional regulatory cooperation and Central Bank Digital Currency (CBDC) exploration projects, laying groundwork for future policy iterations.
In the future, Malaysia's crypto market is expected to further evolve towards "compliance deepening and regional synergy". With the promotion of international regulatory standards like FATF recommendations and MiCA framework, Malaysia may enhance cross-border data exchange, stablecoin reserve regulation, and platform audit mechanisms. Additionally, digital tax compliance will become a trend, promoting cryptocurrency's formal integration into mainstream financial systems. Under this policy tone, Malaysia is poised to steadily release crypto economic growth potential while ensuring controllable risks.
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