Tax is actually not meant to be paid by all people but focuses towards some class of people. As for personal income tax, it need to be paid by the person who earns income up to certain amount and for corporate tax, it imposed on the corporate entity that makes profit from the businesses. In achieving the economic objective, government will take some action such as reduction in taxable person income by the amount paid as the interest on home mortgage loans which will generates more jobs, encourage public to purchase a local produce, reducing inflation and discourage the consumption of certain goods.
In Malaysia tax system, it comprises of corporate and personal income tax, custom duty and local tax. The personal income tax is liable for the individual who has income that derived from Malaysia or received in Malaysia from outside Malaysia for a year of assessment. The tax will be imposed to the resident and non-resident individual in different ways. The resident individual will subject to income tax derived from Malaysia and income received in Malaysia for outside Malaysia whereas non-resident individual will be subject to income tax accruing in or derived from Malaysia. In contrast, non-resident is subject to tax at a flat rate of 25%.
In additional, income that received by an individual in Malaysia which income is derived from outside Malaysia is exempted from tax with effect from the year of