Income Tax for Online Sellers in Malaysia: A Form B Guide for Sole Proprietors

Who is this guide for?

This guide is for Malaysians who sell online as themselves: a sole proprietor or "enterprise" selling on Shopee, Lazada or TikTok Shop, or through a Shopify, WooCommerce or EasyStore web store. It also covers the salaried worker running a shop on the side.

A sole proprietorship is not a separate taxpayer. Your shop's profit is added to your other income and taxed at personal rates on your own return. A Sdn Bhd is different: it files its own company return, which this guide does not cover.

LHDN is clear that online selling is a business. Its introduction to individual income tax lists "Online Business (digital economy)" as an example of business income. It also says profits are taxable including from "Shadow Economy" businesses, meaning businesses not registered with any authority. Its Digital Business page says every individual in digital business must have an income tax number and file Form e-B.

A note on dates. The figures here are for Year of Assessment (YA) 2025, meaning income earned in calendar year 2025 and filed in 2026. They come from LHDN pages and documents published for that year. Deadlines, rates, reliefs and allowances can change every year. Before you file, check the current year's LHDN pages or ask a tax agent.

Form B or Form BE?

LHDN's individual FAQ sets out which form each resident individual uses:

Your situation	Form	Who it is for, in LHDN's words
Salary only, no business	Form BE	Resident individual who does not carry on business
You run a shop, with or without a job	Form B	Resident individual with business, employment and other income
You are not tax resident	Form M	Non-resident individual

The side-hustle case trips people up. LHDN's Malay-language FAQ answers it directly: if you started a small business partway through the year while employed, you file only Form B, and you report your employment income in the same Form B. You do not file both. (The English version of the same FAQ says, more briefly, to submit Form B for business and employment incomes.)

Two more points from LHDN:

• Register even if you made a loss. LHDN's FAQ lists "individuals who run a business (even if the business suffers a loss)" among those who must register a tax identification number (TIN). Malaysian citizens and permanent residents aged 18 and over are registered automatically from JPN data. Anyone else applies online through e-Daftar on MyTax.
• File online. LHDN's Filing Programme for 2026 says taxpayers should use e-Filing for any return that has it. It lists e-Filing as mandatory for individual returns, including e-B, from YA 2023. You file on MyTax at mytax.hasil.gov.my.

When is Form B due?

LHDN's reporting-period page gives these dates each year:

Return	Statutory due date	e-Filing grace period ends
Form BE (no business)	on or before 30 April	on or before 15 May
Form B (business)	on or before 30 June	on or before 15 July

Because e-Filing is mandatory for Form B, the first column is the legal deadline, not an option to file on paper. The second date is not a separate deadline. It is a grace period. LHDN's Filing Programme for 2026 explains it with an example: the Form B due date for YA 2025 was 30 June 2026, with extra time to 15 July 2026 for Form e-B. If you file Form e-B on 16 July 2026, it is treated as late from 1 July 2026 and a penalty under subsection 112(3) of the Income Tax Act 1967 can apply. LHDN also notes that the online dates are subject to current circumstances and points you to its Filing Programme.

The same Filing Programme says the extra time also applies to paying your balance of tax when you e-File. LHDN's late-payment page confirms that a 10% increase is imposed on tax not paid after 30 June / 15 July for individuals with business income. LHDN's FAQ adds a further 5% if the tax and the first penalty are still unpaid 60 days after the penalty is imposed.

Filing late costs more the longer you wait. LHDN's YA 2025 e-Filing briefing shows penalties under subsection 112(3) of 15% of tax payable for returns up to 12 months late, 30% for 12 to 24 months, and 45% beyond 24 months.

What this means in September 2026: YA 2025 returns are already past the grace period. If you have not filed, file now rather than wait. Your YA 2026 return, for sales made in 2026, will be due in 2027 on dates set by LHDN's next Filing Programme. The 2026 programme was issued on 30 December 2025, so watch for the new one around year-end.

What counts as business income for an online seller?

LHDN's Form B notes say the gains or profits of a business "include gross receipts from the sales of goods and services". In Part N of Form B, sales or turnover means "gross income including accrued income from sales, fees and other receipts".

For a typical online shop, business income includes:

• Product sales at the order amount the platform credits you before its fees (after any discounts or seller vouchers you fund yourself). If the platform funds a voucher, coins or a discount, the buyer pays less but that amount is still your sale.
• Shipping fees you charge buyers, where the platform or your store pays them to you.
• Other receipts from selling, such as platform rebates or incentives paid to you, and affiliate or advertising income. LHDN's Digital Business page lists income statements from online advertising companies among the records a digital business must keep.

These are usually not income, but keep the evidence:

• money you put into the business from your own savings;
• loans;
• transfers between your own accounts, including marketplace withdrawals to your bank; and
• refunds to buyers, which reduce your sales rather than count as an expense.

The biggest mistake online sellers make is treating the payout as sales. Your payout is what is left after the platform has deducted commission, fees, seller vouchers and refunds. Record sales at the gross amount and each deduction separately. Our guide to Shopee, Lazada and TikTok Shop seller fees shows how to record each deduction, and the Shopee, TikTok Shop and Stripe net-settlement guide shows how to reconcile the payout to your bank.

Which expenses can you deduct?

The basic rule comes from subsection 33(1) of the Income Tax Act 1967. As LHDN's Public Ruling 4/2015 puts it, an expense "wholly and exclusively incurred in the production of gross income from a source" is deductible against that income. Specific prohibitions in subsection 39(1) can still remove a deduction.

In practice, you start from your profit and loss account and adjust it. LHDN's working sheet HK-1 does exactly this: it takes the balance from your profit and loss account, then adds back non-allowable expenditure. Here is how that plays out for common seller costs:

Cost	Usually deductible?	What to watch
Stock you sold	Yes, as cost of sales	Form B Part N works it out as opening inventory plus purchases minus closing inventory. Count your stock at year-end.
Marketplace commission, transaction and service fees	Yes	Use the amounts on your seller-centre statement or the platform's tax invoice, not a rate you read somewhere.
Shipping you pay, courier bills	Yes	Keep courier invoices or platform shipping deductions. See COD and courier costs.
Advertising (marketplace ads, social media ads)	Yes, if for the business	Keep the ad platform's invoices or receipts.
Packaging and supplies	Yes	Keep supplier receipts.
Phone and internet	Business share only	HK-1 lists telephones and handphones under domestic and personal expenditure to add back.
Entertainment	Generally 50%	Public Ruling 4/2015 allows 50% unless a listed exception applies. Free samples of your own products given to advertise them are one of the exceptions that can be fully deductible.
Your own "salary", your own EPF, cash drawings	No	HK-1 lists these as add-backs. What you take out for yourself is not a business cost.
Stock you take for your own use	No	HK-1 lists "withdrawal of stock in trade for own use" as an add-back.
Depreciation	No	Claim capital allowances instead (next section).
Fines, penalties, compounds	No	HK-1 lists these as add-backs.
Capital expenditure (equipment, furniture)	No	Also claimed through capital allowances.

If a cost is partly personal, deduct only the business part and write down how you split it. A separate business phone line or bank account makes this much easier.

Capital allowances: the basics

Buying a laptop, a printer, shelving or a camera is not an ordinary expense, because the asset lasts. LHDN's Form B notes explain: "Claim for depreciation on the use of business assets is disallowed. However, it is allowed in the form of capital allowance which is deductible from the adjusted business / partnership income. The applicable rate of allowance depends on the type of asset."

LHDN's plant and machinery allowance index (working sheet HK-1.2.4) gives the general rates:

Asset class (general)	Initial allowance (first year)	Annual allowance (each year)
Office equipment, furniture and fittings ("Others")	20%	10%
General plant and machinery	20%	14%
Heavy machinery and motor vehicles	20%	20%

Computers and ICT equipment have their own row in the same index, and cars have extra rules. If you buy either, confirm the current treatment with your tax agent.

For example, RM5,000 of shelving for your stockroom would give a first-year claim of RM1,000 initial allowance plus RM500 annual allowance, then RM500 a year after that until the cost is fully claimed.

Small value assets are simpler, and many seller purchases qualify. Public Ruling 3/2021 says that from YA 2020:

• each asset must cost no more than RM2,000;
• the special allowance is 100%, so you claim the full cost in the year; and
• the total is capped at RM20,000 a year, except for a small and medium company that meets the ruling's conditions.

A sole proprietor is not a company, so the RM20,000 cap applies to you. If you spend more than RM20,000 on small value assets in a year, the ruling says the excess gets the normal capital allowance rates instead. The ruling was published in 2021, so check that it is still current when you file. LHDN has since put a draft fourth edition out for public consultation. The draft keeps the same RM2,000 per-asset limit and RM20,000 annual cap for anyone other than a micro, small and medium company, so the rule for a sole proprietor stays the same.

How long must you keep records?

Seven years. LHDN's FAQ says supporting records must be kept for seven years. The Malay-language FAQ adds that the seven years are counted from the end of the year in which you submit the return. You do not send them with your return, but LHDN can ask for them. Form B item A6 also asks you to declare whether you have kept sufficient records.

LHDN's Digital Business page lists what online sellers should keep, including:

• statements from payment gateways;
• bank statements;
• sales invoices and purchase records;
• email confirmations of sales and purchases;
• agreements; and
• original receipts for each deduction or expense claimed.

For marketplace sellers, that means downloading your monthly settlement or income reports and the platform's fee invoices, and keeping them with your bank statements. Do not rely on the platform to keep years of history for you.

This matters. LHDN's FAQ warns that failing to keep business records is an offence under section 119A. On conviction it can mean a fine of RM300 to RM10,000, imprisonment, or both.

CP500: paying tax during the year

Employees have tax deducted from their salary every month. Business owners usually pay through CP500, LHDN's notice of instalment payments under section 107B of the Income Tax Act 1967. LHDN's payments page explains how it works:

• LHDN estimates the amount and sends the CP500 at the start of each year.
• If you have business, rental or royalty income, you pay every two months, up to six instalments, starting in March. Follow the exact dates and amounts on your own notice.
• If you have not received your CP500 by the end of February, you can get it on MyTax or by calling the HASiL Contact Centre on 03-8911 1000.
• You can ask for the instalments to be revised. LHDN's payments page says a first revision can be submitted by 30 June or 31 October, and a second by 31 October, in each calendar year. In practice: you can revise by 30 June and again by 31 October; if you skip June, your first revision can still be made by 31 October. LHDN's FAQ says to use the CP502 form attached to your CP500 notice, and it mentions only the 30 June date, so apply early.

When you file Form B, you enter the CP500 instalments you paid for that year of assessment only, not payments towards earlier years. Anything still owed after that is your balance of tax, due by the Form B deadline.

If your sales have grown a lot, your CP500 estimate may be too low, and you will face a larger balance to pay by 30 June. If sales have dropped sharply, you may be paying too much. It is worth looking at your year-to-date profit before the revision dates.

Worked example: Aisyah's online shop, YA 2025

Aisyah is single and tax resident. She sells skincare on Shopee and on her own WooCommerce store as a sole proprietor, with no other income. These are her figures for 2025. They are illustrative, not typical.

Step 1: her profit and loss account

Item	RM
Sales (order amounts credited before platform fees), after refunds	180,000
Cost of sales: opening stock 10,000 + purchases 90,000 − closing stock 12,000	(88,000)
Gross profit	92,000
Marketplace commission, transaction and service fees	(18,000)
Shipping paid by her	(9,000)
Advertising	(7,500)
Packaging	(3,000)
Phone and internet (full bills)	(2,400)
Depreciation on her laptop	(600)
Net profit per accounts	51,500

Step 2: adjust for tax (following working sheet HK-1)

Item	RM
Net profit per accounts	51,500
Add back: depreciation	600
Add back: personal share of phone and internet (she uses the line 50% for business)	1,200
Adjusted income	53,300
Less: capital allowance, laptop bought for RM1,800, claimed in full as a small value asset	(1,800)
Statutory business income	51,500

Step 3: work out the tax

Item	RM
Total income	51,500
Less: individual relief (LHDN's introduction page gives RM9,000 for an individual and dependent relatives)	(9,000)
Chargeable income	42,500
Tax on the first 35,000 (YA 2025 rate table)	600
Tax on the next 7,500 at 6%	450
Income tax	1,050

The RM400 individual rebate does not apply, because LHDN allows it only when chargeable income is RM35,000 or less. If Aisyah paid RM900 through six CP500 instalments of RM150 during 2025, her balance of RM150 was due by 30 June 2026, or by 15 July 2026 since she e-Filed.

Aisyah may have other reliefs, such as EPF contributions or lifestyle purchases, that would lower her tax further. LHDN publishes the full relief list for each year of assessment. The point of the example is the order of the steps: accounts first, then tax adjustments, then capital allowances, then reliefs.

A simple year-round routine

Every month

• Download each marketplace's settlement or income report and fee invoice.
• Record sales at gross, with fees, shipping and seller vouchers as separate lines.
• Match withdrawals on your bank statement to your marketplace balance, not to sales.
• Save receipts for ads, packaging, courier bills and equipment.
• Own web store? Follow the Shopify, WooCommerce and EasyStore bookkeeping checklist for orders, refunds and gateway payouts.

Before the CP500 revision dates (30 June and 31 October)

• Look at your year-to-date profit. If it is far from last year's, consider asking LHDN to revise your instalments.

At year-end (31 December)

• Count your stock and value it.
• List assets bought in the year, with cost, date and receipt.
• Close the year's books and produce a profit and loss for January to December.
• Prepare the HK-1 adjustments and capital allowances, then file Form e-B by the Filing Programme date.

Income tax is separate from SST and e-invoicing. To check whether your shop needs SST at all, see do online sellers need to register for SST?, and for e-invoicing see e-invoicing for online sellers: marketplace vs your own store. If you are registered for SST, see our SST 8% invoicing and credit notes guide. For e-invoicing sales to consumers who do not ask for an e-invoice, see the LHDN consolidated B2C e-invoice guide.

How GetPay helps

GetPay keeps the books that your Form B figures come from. It is not a tax filing tool, and it is worth being clear about the limits:

• Profit and loss for the year. GetPay's profit and loss report can be run for a calendar year or a month, exported to CSV and printed. That gives you the sales and expense totals for Form B Part N and the starting point for HK-1. Opening and closing stock for cost of sales come from your own year-end stock count.
• Bank statements. Upload CSV statements from Public Bank, Maybank, CIMB, UOB or BSN, check the preview, then import. You can attach receipt files to transactions so each claim has its evidence. Snapping a receipt photo to create a draft uses AI receipt reading; whether it is included depends on your plan.
• Your own web store and courier. WooCommerce connects self-serve today, and paid orders become invoices. Shopify, EasyStore and EasyParcel are in early access, set up together with you. EasyParcel shipments become courier bills.
• No Shopee, Lazada or TikTok Shop connection yet. TikTok Shop is waiting for TikTok's partner approval, and Shopee and Lazada are reviewing our applications. For now, record each month's marketplace summary as a journal entry.
• Fixed assets. You can keep a fixed-asset register and post accounting depreciation. That is book depreciation, not tax capital allowances.
• What GetPay does not do. It does not fill in or submit Form B, calculate capital allowances, reliefs or your tax, or manage CP500 instalments. Use MyTax and, where needed, a licensed tax agent for those steps.

Try the live demo below to see a sample business's books, no signup needed. Or start free and start keeping this year's records in one place.

This guide is general information, not tax advice. Figures and dates are for Year of Assessment 2025 from LHDN sources published in 2025 and 2026, and LHDN rules change every year. Confirm your own position with LHDN or a licensed tax agent before you file.