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      On 10 October 2025, Malaysia’s prime minister and finance minister presented the fourth budget from the MADANI government.1  It focuses on three main goals: encouraging reform and good governance, driving national growth, and improving the quality of life for all Malaysians.

      This year’s budget does not offer any new tax measures affecting international assignees.  Having said that, the proposal would expand a few existing reliefs to include other related expenses and reintroduce tax relief for individuals.

      WHY THIS MATTERS

      Although Budget 2026 does not introduce new tax measures, several existing reliefs would be expanded in scope and increased in value.  Taxpayers who utilise these enhanced reliefs may experience meaningful tax savings.

      For international assignees—whether inbound to Malaysia or outbound but still subject to Malaysian tax—these changes could help reduce their overall tax burden. In turn, this may lead to cost efficiencies for international assignment programmes, offering potential savings for both employers and assignees.

      The impact of the budget changes on the taxation of inbound assignees in Malaysia, as well as outbound assignees who continue to be subject to Malaysian tax, will vary based on each individual's unique circumstances.  To benefit from available reliefs, it is crucial to evaluate their Malaysian tax residency status, which hinges on the specific pattern and duration of their stay in the country.

      Expansion of Scope and Increase in Limits for Reliefs

      It is proposed that the limit be increased, or the scope be expanded, for the existing reliefs as noted below:

      Type of Tax Relief

      Tax Relief Amount (Current)
      MYR

      Tax Relief Amount (Proposed)
      MYR

      Proposed Changes and Effective Period

      Medical expenses for taxpayers, spouses, or children on:

       - Prescribed vaccination expenses.

       

      Restricted to 1,000

       

      The scope is expanded to cover all vaccines registered with and approved by the Ministry of Health.

      (Effective from year of assessment (YA) 2026)

      Medical expenses for taxpayers, spouses, or children on:

      - Assessment for the purpose of diagnosis of learning disability and early intervention programme or rehabilitation treatment for learning disability.

      Restricted to 6,000

      Restricted to 10,000

      The maximum relief has been increased by  MYR 4,000.

      (Effective from YA 2026)

      Fees paid for children enrolled in child-care centres or kindergartens registered with the relevant authority (this relief can be claimed by either parent of the children)

      3,000

      It is expanded to the following:

      ·         Include registered daily-care centres or after-school-transit centres;

      ·         Age limit for children has increased from 6 to 12 years.

      (Effective from YA 2026)

      Life insurance premium or takaful contributions.

      (for taxpayer and spouse)

       

      3,000

      The scope is expanded to include eligible children*.

      (Effective from YA 2026)

      Education and medical insurance premiums (for taxpayers, spouses and children)

      4,000

      Conditions to be imposed on eligible children*:

      ·         Aged below 18 and unmarried;

      ·         Aged 18 and above, unmarried and pursuing tertiary education; or

      ·         No age limit for unmarried disabled children.

      (Effective from YA 2026)

      Environmental sustainability and home safety related expenses:

      ·         Payment for installation, rental, purchase including hire-purchase of equipment or subscription for use of electric-vehicle-charging facility for taxpayer’s own vehicle and not for business use.

      ·         Expense for the purchase of food waste composting machines for household use.

      2,500

      The scope is expanded to include expenses for the purchase of food waste grinders and/or Closed Circuit Television (CCTV) for household use. Claimable once within two years. 

      (Effective for YA 2026 and YA 2027)

      Source: KPMG in Malaysia

      Reintroduction of Domestic Tourism Expenses Tax Relief

      The tax relief of MYR 1,000 for domestic tourism expenses has been reintroduced, covering payments for entrance fees to tourist attractions as well as cultural and arts programmes.  The above relief can be claimed for YA 2026 only.

       

      KPMG INSIGHTS

      The tax measures outlined in Budget 2026 may offer benefits to assignees either in Malaysia or abroad who remain subject to Malaysian tax, provided they qualify as Malaysian tax residents.  While the potential tax savings may be modest, they could still contribute to reducing the overall cost of international assignments.  To benefit from these reliefs, careful consideration should be given to the assignee’s pattern of stay in Malaysia, as this determines their tax residency status under Malaysian tax law.

      Taxpayers are reminded to maintain proper documentary evidence to substantiate their claims for relief. In the event of a tax audit, the inability to furnish such documentation may lead to the disallowance of reliefs and could result in penalties of up to 100 percent of the underpaid tax.

      Taxpayers and global mobility programme managers with questions about how the above-noted measures may impact them when they are enacted and/or what steps they may need to take to be prepared to be in compliance should consult with their usual tax service provider or a member of the GMS tax team with KPMG in Malaysia (see the Contacts section).

      FOOTNOTE:

      1  The budget speech and related budget documents can be found on the “Budget 2026” webpage on the website for Malaysia’s Ministry of Finance (in English). And in Malay, see the “Bajet 2026” webpage.

      For coverage of last year’s budget, see GMS Flash Alert 2024-237, 4 December 2024.

       

      MYR 1 = EUR 0.20
      MYR 1 = USD 0.23
      MYR 1 = GPB 0.18
      MYR 1 = AUD 0.36
      MYR 1 = CNY 1.69

      Source:  www.xe.com  

      Contacts

      yen-ping-long
      Yenping Long

      Partner, Global Mobility Services

      KPMG in Malaysia

      chooi-lian-fong
      Chooi Lian Fong

      Associate Director, Global Mobility Services

      KPMG in Malaysia

      chong-eng-wee
      Chong Eng Wee

      Director, Global Mobility Services

      KPMG in Malaysia

      More Information

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      The information contained in this newsletter was submitted by the KPMG International member firm in Malaysia.

      GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

      © 2025 KPMG Tax Services Sdn Bhd, a company incorporated under Malaysian law and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.