Tax on freelance income in Malaysia — what LHDN actually expects
by Tax Sifu·May 20, 2026
Freelancers and side hustlers are required to declare income to LHDN. Most don't. Here's what the law says and how it works practically.
The rule: All income earned in Malaysia is taxable, including freelance income. You must file a tax return if your income exceeds your non-taxable threshold (roughly RM34,000 after reliefs for most people).
How to declare: Add freelance income under "Other Income" in your e-Filing. If you're registered as a sole proprietor, declare under the business income schedule.
What you can deduct as a freelancer:
- Equipment purchased for the work (laptop, software, equipment)
- Internet subscription (if work-related)
- Co-working space fees
- Professional development costs
- A portion of your home internet and utilities if you work from home
The enforcement reality: LHDN has been increasing digital payment data-sharing which is making undeclared income more visible. Platforms like Grab, Shopee, and major banks are now required to share transaction data.
Practical advice: Declare what you earn. The tax on RM3,000/month in additional freelance income for someone in a normal bracket isn't catastrophic. The penalty for undeclaring is.