Malaysia: Overview of direct tax measures in 2025 budget
Direct tax proposals introduced in 2025 budget
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October 24, 2024
The Minister of Finance on October 18, 2024, tabled the 2025 budget, which would introduce several direct tax proposals:
- A 2% dividend tax would be imposed on local dividend income exceeding RM100,000 earned by individual shareholders. Read an October 2024 report prepared by the KPMG member firm in Malaysia
- Individual (personal) income tax reliefs would be extended, covering disabled individuals and senior citizens.
- The tax exemption on foreign-sourced income received by individuals in Malaysia would be extended for another 10 years.
- Subsidies would be rationalized to target the top 15% income earners. This includes removing petrol subsidies and gradually reducing education and healthcare subsidies for the top earners.
- A new investment incentive framework is proposed, focusing on high-value activities.
- Tax incentives would also be provided for Integrated Circuit (IC) Design services, and special rates would be offered for investments in 21 economic sectors.
- Private higher education institutions and private skill training institutions developing new courses would receive full tax deductions.
- The government plans to review tax incentives, introduce non-tax incentives, and examine the feasibility of a strategic investment tax credit mechanism, to mitigate the effects of the global minimum tax that will come into effect in 2025. Read an October 2024 report prepared by the KPMG member firm in Malaysia
- Companies investing in smart logistics complexes may benefit from an investment tax allowance.
Read an October 2024 report prepared by the KPMG member firm in Malaysia
For information on indirect tax proposals in the budget, read TaxNewsFlash.