You built your Shopee store. Your sales are growing. Now you are wondering whether LHDN has noticed — and what you actually owe. Good instinct. Malaysian income tax applies to ecommerce income, and ignoring it is not worth the risk. But it is more manageable than most sellers expect.
What Does Income Tax Mean for Your Ecommerce Store?
Income tax is a tax on net business earnings imposed under the Malaysian Income Tax Act 1967, administered by LHDN (Lembaga Hasil Dalam Negeri — the Inland Revenue Board of Malaysia). Every individual or company earning above the minimum threshold must declare and pay this tax annually. For sole proprietors, income tax is filed as personal tax using Form B, due June 30 each year via the MyTax portal at mytax.hasil.gov.my.
If you sell on Shopee, Lazada, TikTok Shop, your own website, or any combination of channels, every ringgit of net profit is considered business income by LHDN.
That is the part most informal sellers miss. It does not matter whether you registered with SSM. It does not matter if you only accept bank transfers. Once you have consistent ecommerce revenue, LHDN expects you to declare it.
The good news: Malaysia’s income tax system is designed around net income, not gross sales. A seller with RM 200,000 in annual sales but RM 140,000 in legitimate business expenses pays tax on RM 60,000 — minus personal reliefs. That brings effective tax liability down considerably for most sellers at this revenue level.
Understanding income tax is the first step toward filing confidently. For a broader view of your full tax obligations as a Malaysian online seller, see the ecommerce tax compliance hub .
Who Needs to Pay Income Tax as a Malaysian Ecommerce Seller?
Every Malaysian tax resident with ecommerce business income must file an income tax return. The filing obligation applies from the first ringgit of income. Tax is only owed once chargeable income — after all deductions and personal reliefs — exceeds RM 5,000. Sole proprietors file Form B by June 30; Sdn Bhd companies file Form C within 7 months of their financial year end.
Your business structure determines how your income is assessed and which form you file.
Sole proprietors and partnerships are the most common structure for Shopee and Lazada sellers. Your business income flows directly into your personal income tax return. You are taxed as an individual using progressive rates. If you registered with SSM as a sole proprietor, your Tax Identification Number (TIN) is your MyKad number. You file Form B.
Sdn Bhd companies are separate legal entities that file their own returns. The company uses Form C. The corporate income tax rate is 24% on chargeable income (or 17% on the first RM 600,000 for qualifying SMEs with paid-up capital of RM 2.5 million or less, per LHDN guidelines). As a director, you draw a salary and file your personal return separately using Form B or Form BE.
If you are unsure which business structure suits your ecommerce operation, read the comparison of sole proprietor vs Sdn Bhd for Malaysian ecommerce sellers .
Non-residents who sell to Malaysian customers via their own platforms face a different set of rules. For marketplace sellers physically based outside Malaysia, the platforms themselves handle withholding obligations. This guide focuses on Malaysian residents operating as sole proprietors.
What Expenses Can You Deduct from Your Ecommerce Income?
Malaysian income tax allows ecommerce sellers to deduct all expenses incurred wholly and exclusively for the business. Common deductions include cost of goods sold, platform fees, shipping, packaging, advertising, storage costs, software subscriptions, and a proportionate share of home office costs. These deductions reduce your gross business income before LHDN calculates your chargeable income.
This is where most sellers leave money on the table. Every legitimate business expense lowers your taxable income — which lowers your tax bill.
Here are the deductions most applicable to Malaysian online sellers:
| Expense Category | Examples | Notes |
|---|---|---|
| Cost of goods sold | Inventory purchases, raw materials | Largest deduction for most product sellers |
| Platform fees | Shopee commission, Lazada seller fees, TikTok Shop fees | Deductible in full |
| Shipping and logistics | Pos Laju, J&T, DHL, GDex charges | Seller-paid costs only |
| Packaging | Boxes, poly mailers, bubble wrap, labels | Fully deductible |
| Advertising | Shopee Ads, Facebook/Meta Ads, TikTok Ads, Google Ads | Fully deductible |
| Storage and warehouse | Rented storage unit, third-party fulfillment fees | Deductible for business portion |
| Software and subscriptions | Inventory tools, accounting software, e-store platforms | Deductible in full |
| Home office | Proportionate utilities, internet, rent | Deductible for business-use percentage only |
| Payment processing | FPX fees, iPay88, Stripe, GHL charges | Deductible in full |
| Professional fees | Accountant, tax agent, legal advisor fees | Deductible in full |
After deducting business expenses, you apply personal reliefs to reduce your chargeable income further. Per the LHDN tax relief schedule, the individual relief is RM 9,000 per year. Other common reliefs for sole proprietors include EPF contributions (up to RM 4,000), life insurance premiums (up to RM 3,000), medical expenses for parents (up to RM 8,000), and education fees (up to RM 7,000). The full relief list is published on LHDN’s website and updated annually before the filing period.
Record everything. LHDN requires you to maintain business records for 7 years. Without receipts or invoices, you cannot substantiate deductions if LHDN audits your return.
Already handling income tax but unsure about SST? Malaysian ecommerce sellers may have two separate tax obligations. Read the SST guide for Malaysian ecommerce sellers to understand when the RM 500,000 annual revenue threshold triggers SST registration — a separate requirement from income tax.
How Much Income Tax Will You Pay as an Online Seller?
Malaysian personal income tax uses a progressive rate schedule — higher income is taxed at higher rates, but only the income within each band is taxed at that band’s rate. A sole proprietor with RM 80,000 in chargeable income after reliefs does not pay 21% on the whole amount; they pay lower rates on each band up to RM 80,000. The rates below are per LHDN’s individual income tax rate schedule for Assessment Year 2024.
| Chargeable Income (RM) | Tax Rate | Tax on This Band |
|---|---|---|
| 0 – 5,000 | 0% | RM 0 |
| 5,001 – 20,000 | 1% | Up to RM 150 |
| 20,001 – 35,000 | 3% | Up to RM 450 |
| 35,001 – 50,000 | 8% | Up to RM 1,200 |
| 50,001 – 70,000 | 13% | Up to RM 2,600 |
| 70,001 – 100,000 | 21% | Up to RM 6,300 |
| 100,001 – 250,000 | 24% | Up to RM 36,000 |
| 250,001 – 400,000 | 24.5% | Up to RM 36,750 |
| 400,001 – 600,000 | 25% | Up to RM 50,000 |
| 600,001 – 1,000,000 | 26% | Up to RM 104,000 |
| Over 1,000,000 | 28% | — |
Source: LHDN Individual Income Tax Rate Schedule , Assessment Year 2024.
A worked example using ranges: A sole proprietor with gross ecommerce sales of RM 180,000, allowable business expenses of RM 110,000, and claiming the RM 9,000 individual relief plus RM 4,000 EPF relief would have chargeable income of roughly RM 57,000. Based on the LHDN rate table above, income tax on RM 57,000 — calculated band by band — typically falls in the range of RM 4,000 to RM 5,500, depending on additional reliefs claimed. This is an illustrative range; your actual liability depends on your specific deductions and all reliefs applicable to your situation.
The effective tax rate — total tax divided by total chargeable income — is usually well below the highest bracket rate, because most of the income is taxed at lower bands.
How Do You File Your Income Tax Return as a Malaysian Seller?
Malaysian sole proprietors file income tax online via the MyTax portal at mytax.hasil.gov.my. The process requires a Tax Identification Number (TIN), business income and expense records for the preceding year, and personal relief supporting documents. First-time filers must register on the portal before the June 30 deadline. Submission and payment must both be completed by the deadline.
Here is the process, step by step:
Step 1: Register your TIN Malaysian citizens use their MyKad number as their TIN. If you have never filed before, register through the e-Daftar system inside the MyTax portal or visit any LHDN branch. Non-citizens must apply for a separate TIN.
Step 2: Gather your records for the preceding year You need:
- Total gross ecommerce revenue across all platforms (Shopee Seller Center, Lazada Seller Center, and TikTok Shop each provide downloadable payout and transaction reports)
- A summary of all allowable business expenses with supporting receipts or invoices
- Bank statements for your business accounts
- EPF and SOCSO contribution statements for personal relief claims
- Life insurance policy documents if claiming that relief
Step 3: Log in to MyTax and select Form B Sole proprietors with business income select e-Filing → Form B. Form BE is for individuals with employment income only and no business. Do not confuse the two — filing the wrong form requires an amended return.
Step 4: Complete the return Fill in your business income in Section B of Form B, declare all income sources (including any rental or other income), enter your allowable deductions, and claim your personal reliefs. MyTax calculates the tax automatically based on your inputs. Review the tax computation before submitting.
Step 5: Submit and settle any tax payable Submit the return electronically. If tax is owed, pay via FPX online banking, credit/debit card, or at an LHDN payment counter. Both submission and payment must be completed by June 30.
What Are the Deadlines and Penalties for Malaysian Ecommerce Sellers?
The income tax filing deadline for sole proprietors in Malaysia is June 30 each year for Form B submissions via MyTax e-Filing. Sdn Bhd companies must file within 7 months of their financial year end. Missing deadlines triggers LHDN fines. Underreporting income results in a 45% additional tax surcharge under Section 113 of the Income Tax Act 1967, plus potential prosecution.
Filing deadlines at a glance:
| Filing Form | Deadline | Who It Applies To |
|---|---|---|
| Form BE | April 30 | Individuals with employment income only |
| Form B | June 30 | Sole proprietors and partners with business income |
| Form C | 7 months after FY end | Sdn Bhd companies |
| CP500 instalments | Bimonthly per notice | Sellers who receive a CP500 instalment notice |
CP500 — estimated tax instalments: LHDN may issue a CP500 notice requiring advance tax payments in six bimonthly instalments across the year. The amounts are based on LHDN’s estimate of your liability from the prior year’s assessment. If your actual income is lower, you can apply to revise the instalment amounts. Ignoring a CP500 instalment results in a 10% penalty on each missed payment, per the Income Tax Act 1967.
Penalties for non-compliance (per the Income Tax Act 1967):
- Failure to file a return: fine of RM 200 to RM 20,000 and/or up to 6 months’ imprisonment
- Late payment of tax: 10% penalty on the unpaid balance
- Underreporting or omitting income (Section 113): 45% additional tax on the understated amount, plus potential prosecution
LHDN typically issues a notice of assessment before imposing penalties, giving you an opportunity to respond. The practical lesson: file on time even if you cannot pay in full immediately. Late payment interest is smaller than combined late filing penalties plus a 45% surcharge for underreporting. If cash flow is constrained, contact LHDN to arrange an instalment plan before the deadline, not after.
For a full checklist of all compliance obligations applicable to your Malaysian ecommerce business, see the ecommerce compliance checklist for Malaysian sellers .
Information in this guide was verified against LHDN guidance as of May 2026. Tax regulations change. Verify current requirements at hasil.gov.my or consult a registered tax agent before filing.
Frequently Asked Questions
Do I need to pay income tax if I sell on Shopee or Lazada in Malaysia?
Yes, income from marketplace sales is business income under Malaysian income tax law. If your chargeable income — after business deductions and personal reliefs — exceeds RM 5,000, you owe income tax. The filing obligation applies regardless of business structure or whether you operate informally without SSM registration. LHDN treats all regular ecommerce activity as taxable business income.
What expenses can I deduct from my ecommerce income in Malaysia?
Allowable deductions include cost of goods sold, platform commission fees charged by Shopee, Lazada, or TikTok Shop, shipping costs, packaging materials, advertising spend, warehouse or storage rental, business software subscriptions, and a proportionate portion of home office expenses. These reduce your gross business income before LHDN applies personal reliefs and calculates your chargeable income. Maintain receipts for 7 years.
When is the income tax filing deadline for sole proprietor ecommerce sellers?
Sole proprietors with business income must file Form B by June 30 each year through the MyTax e-Filing portal at mytax.hasil.gov.my. This is two months later than the April 30 deadline for salaried employees filing Form BE. Missing the June 30 deadline exposes you to fines ranging from RM 200 to RM 20,000 under LHDN enforcement guidelines.
Do ecommerce sellers pay a flat tax rate or progressive rates in Malaysia?
Malaysian personal income tax uses progressive rates. Sole proprietors are taxed as individual taxpayers — starting at 1% on chargeable income above RM 5,000 and rising to 28% on income above RM 1,000,000 (per LHDN’s individual tax rate schedule for Assessment Year 2024). A seller with chargeable income between RM 50,001 and RM 100,000 would fall across the 13% and 21% brackets for those portions.
Is there a threshold below which I owe no income tax as an ecommerce seller?
You owe no income tax if your chargeable income — after all business deductions and personal reliefs — is RM 5,000 or below. In practice, a sole proprietor claiming the standard RM 9,000 individual relief and other common reliefs will not owe tax on net business income below roughly RM 14,000 per year. Filing a return is still legally required even when no tax is owed.