Chapter 2:Income Tax--What is all about ?(In genaral)

In Malaysia , income tax is a tax chargeable on individuals, companies, cooperatives and others who are in receipt of employment, business, dividend, rental, royalty, pension and other incomes. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and serve the public.
So,in other word,an income tax is a tax levied on the financial income of persons, corporations, or other legal entities.

Types of Income Tax:

• When the tax is levied on the income of companies, it is often called a corporate tax, corporate income tax, or corporation tax.
  
• Individual income taxes often tax the total income of the individual (with some deductions permitted), while corporate income taxes often tax net income (the difference between gross receipts, expenses, and additional write-offs).

In Malaysia,personal income tax is often collected on a pay as your earn basis, with small corrections made soon after the end of the tax year. These corrections take one of two forms: payments to the government, for taxpayers who have not paid enough during the tax year; and tax refund from the government for those who have overpaid.

Why Pay Income Tax ?

Well, I know everyone who has to pay income tax is reluctant to pay it because we don’t know what we will get for paying taxes. Here, I want to give some reasons why to pay tax and the first and priority one is to build the schools and public hospitals for everyone. Besides that, don’t forget about public library, civic center, think paved roads, sidewalks, Zoo and other infrastructure which are important to each one of us.

Final words:
Because of income tax is a fee that need to pay for government during tax year, so i categorized it as a Expenses (bills,rental fee,insurance premium,buying goods) even you only have to pay it once in a year.For your information,the higher of your monthly salary,the higher of interest rate that you need to pay (max of 26%) .But with money from Forex market,what you earn from Forex market(categorize as Income from overseas,because our earn money are comes from foreign countries regulated Forex broker) is tax free until now!
See next post for Are you subject to Malaysian income tax?