1. Previously, IHCs could enjoy SME tax rates under Paragraph 2A as long as they meet the SME definition of having share capital below RM2.5 million.

The tax rates are 17% on the first RM600,000 chargeable income and the balance at 24%.

2. With effect from Year of Assessment 2020, the conditions for IHC to enjoy the SME tax rate under Paragraph 2A have been amended to:

  • Paid-up capital of not more than RM2.5 million, and
  • Gross income from business sources not exceeding RM50 million.

3. Companies are not entitled to enjoy the tax rate under Paragraph 2A. They will be taxed at flat rate of 24% where:

  • Company without business source income,
  • Company with gross income from business source exceeding RM50 million (including foreign business source), and
  • Company ceased business operation but has other income such as rental and interest income.