TraTax | Tax Snapshot 2025

As we welcome 2025, TraTax has provided a holistic snapshot of key tax measures set to be implemented by Malaysia during 2025

1. Introduction of 2% Dividend Tax for dividend income received by individuals effective 1^st January 2025.
2. e-Invoicing implementation for all taxpayers; effective 1^st January for entities with annual revenue of RM25-RM100 million, and 1^st July for entities with annual revenue of <RM25 million. With this regard, a Taxpayer Identification Number (TIN) finder has been launched by the tax authority yesterday to allow entities to look up the TIN of the customers.
3. Expansion of Sales Tax to include non-essential goods and Services Tax to include commercial service transactions effective 1^st May 2025. Details are expected to be announced soon.
4. Implementation of Global Minimum Tax (GMT) / Pillar 2 for any financial year commencing on or after 1^st January 2025.
5. Introduction new Investment Incentive Framework by 3^rd quarter of the year.
6. Operationalization of the Single Family Office scheme, which entails a 20-year income tax exemption among other benefits, by 1^st quarter of the year.
7. Implementation of RPGT self-assessment regime effective from 1^st January 2025.
8. Labuan: Imposition of ‘fit and proper’ criteria for full time employees and, separately, transition from previous year basis to current year basis; resulting in two YAs 2025 and hence cash flow implications for affected taxpayers. This is incidental to the introduction of self-assessment features for Labuan.
9. Implementation of XBRL-based reporting (known as Malaysian Income Tax Reporting System (MITRS)) for tax workings by companies effective from tax year 2025.
10. Preparation for Stamp Duty self-assessment regime & Carbon Tax implementation in 2026.

TRATAX remains ever committed to supporting your business’ decision-making in 2025 by providing strategic insights on tax aspects.

Here’s a recap of key tax measures from 2024:

1. Sales Tax on Low Value Goods effective 1^st anuary 2024 for e-Commerce Platforms and companies that sells goods online.
2. Capital Gains Tax on foreign gains effective 1^st January 2024. Exemption is applicable if economic substance requirements are met.
3. Capital Gains Tax on sale of domestic shares (unlisted) effective 1^st March 2024. Exemption is available for disposals in connection with IPOs and internal restructuring, subject to stringent criteria and potentially involve upfront tax payment prior to application/approval for the exemption.
4. Increase of Service Tax rate and imposition of Service Tax (and hence imported service tax) on logistics services, maintenance & repair services and brokerage effective 1^st March 2024. Multiple exemptions provided with criteria being revised on multiple occasions up to November 2024.
5. Criteria for exemption on foreign source dividend income received by companies has been liberalised in June 2024 to either meeting economic substance requirements or alternatively meeting two criteria involving ‘subject to tax’ rule and minimum headline tax rate of 15%. The revised criteria is applicable [retrospectively] for the period 1^st January 2022 to 31^st December 2026.
6. First phase of e-Invoicing implementation effective 1^st August / 1^st October 2024 (companies with turnover exceeding RM100 million).
7. Release of a 190-page Transfer Pricing Guideline in December 2024 which illustrates principles from the TP Rules 2023 (such as the use of narrower arm’s length range instead of interquartile range), reiterates eminent OECD principles and retains/strengthens certain provisions from the predecessor guideline. Key changes include adoption of 5% as a standard mark-up for low-value adding intragroup services and introduction of new thresholds for minimum TP documentation.
8. Release of Transfer Pricing audit framework in December 2024 which provides for potential penalty waiver for FY 2023 and/or FY 2024 (depending on the financial year-end of the respective company) on failure to prepare contemporaneous transfer pricing documentation.