A friend of mine who is Senior Manager of manufacturing industry recently got a pay rise of RM500, which increasing his monthly income to RM10,500 and putting him in a much higher tax bracket. He came back to me to ask whether should he take the pay rise?
Now, I would like to share with you the percentage of the increment that goes tax when the salary increase by RM500 per month.
After calculated, we found that the increment of RM6,000 is taxed at 24.34%. Do you think is it worthwhile?
Having said that, compared to our neighbor across the country, the Malaysian effective tax rate is a notch higher. Therefore, I think our Malaysia government should reduce the personal tax rates to enhance our competitive edge. Don’t you think so?