2024/2025 Malaysian Tax Booklet

• Compensation for loss of employment and payments for restrictive covenants

-    full exemption if due to ill health; or

-    RM10,000 for every completed year of service with the same employer / companies in the same group.

• Dividends paid, credited or distributed by co-operative societies to their members.
  
• Fees or honorarium (not part of official duties) for validating, moderating or accrediting franchised educational programmes in higher educational institutions.

• Foreign-sourced income of residents received in Malaysia from outside Malaysia from 1 January 2022 to 31 December 2026 (extended to 31 December 2036) (subject to conditions) for:

  • resident individuals in respect of all classes of income except for income from a partnership business in Malaysia. 

  • resident individuals in respect of dividend income in relation to a partnership business in Malaysia.

  • resident companies and limited liability partnerships (LLP) (other than residents carrying on the business of banking, insurance, sea or air transport) in respect of dividend income.

• Foreign-sourced income of non-resident persons received in Malaysia from outside Malaysia.
  
• Grant or subsidy received from the Federal or State Government.
• Green Sustainable and Responsible Investments (SRI) sukuk grant issued in line with the Securities Commission’s (SC) guidelines and SRI sukuk and bond that meets the ASEAN Green, Social and Sustainability Bond Standards approved by the SC. W.e.f 1 January 2024, expanded to include SRI-Linked Sukuk Grants and bonds issued under the ASEAN Sustainability-Linked Bond Standards approved by SC. (applications received by 31 December 2025).
• Income (other than dividends, lending fees, interest earned on collateral and rebates) arising from a loan of securities listed on Bursa Malaysia and the return of the same or equivalent securities, and the corresponding exchange of collateral, in respect of securities borrowing and lending transaction under a Securities Borrowing and Lending Agreement.
  
• Income from employment on board a ship (defined) used in a business operated by a resident owner of a ship registered under the Merchant Shipping Ordinance 1952.
• Income from director’s fees received by a non-Malaysian citizen director of a Labuan entity until YA 2025.
• Interest paid / credited to non-resident companies, in respect of :
  

-    government securities; or

-    sukuk or debentures issued in Malaysian Ringgit (other than convertible loan stock) approved or authorised by, or lodged with, the SC.

The exemption does not apply to interest paid or credited: 
-     to a company in the same group; or 
-     by a special purpose vehicle (SPV) to a company pursuant to the issuance of asset-backed securities lodged with the SC where the company and the person who establishes the SPV are in the same group (w.e.f. 1 January 2022)

• Interest or bonus, gains or profits received by a resident individual from deposits placed in licensed institutions.
• Interest or discount paid / credited to any individual, unit trust and listed closed-end fund in respect of:

-    bonds or securities issued or guaranteed by the Government

-    debentures or sukuk (other than convertible loan stock) approved or authorised by, or lodged with, the SC; or

-    Bon Simpanan Malaysia issued by Bank Negara Malaysia (BNM).

• Interest paid / credited to any individual in respect of Merdeka bonds issued by BNM.
• Interest paid / credited to any person in respect of any savings certificate issued by the government.
• Interest paid / credited to any person in respect sukuk originating from Malaysia (other than convertible loan stock) issued in any currency other than Malaysian Ringgit and approved or authorised by, or lodged with, the SC, or approved by the Labuan Financial Services Authority (Labuan FSA).

The exemption does not apply to interest paid or credited:

-     to a company in the same group;

-     to licensed bank, licensed Islamic bank and prescribed development financial institution; or

-    by a SPV to a company pursuant to the issuance of asset-backed securities lodged with the SC or approved by the Labuan FSA where the company and the person who establishes the SPV are in the same group (w.e.f. 1 January 2022)

• Pensions, which is derived from an employment exercised in Malaysia, where the recipient has reached the age of 55, or the compulsory retirement age or retires due to ill health.
• Perquisites (in cash or in kind) for long service (more than 10 years of employment with the same employer), past achievement or service excellence, innovation, or productivity award up to an amount or value of RM2,000 per YA.
• Profit paid, credited or distributed to partners by an LLP.
• Profits earned by individual investors from investments made (during the period 1 April 2016 to 31 March 2019) through an Investment Account Platform is exempted from tax for 3 consecutive years.
• Prize money received from recognised e-sports tournaments
• Retirement gratuities are fully exempt:

-    where the retirement is due to ill health; or

-    on or after reaching the age of 55 or other compulsory age of retirement*

-    upon reaching compulsory retirement age pursuant to an employment contract or collective agreement at the age of 50 but before 55*

^{* Employment has lasted 10 years with the same employer or with companies in the same group.}

• Retirement gratuity or termination payment other than gratuities which are fully exempted, up to an amount not exceeding RM1,000 per completed year of service.
• Royalties received by an individual resident in Malaysia in respect of:

• Royalties received by non-resident franchisors from registered private higher educational institutions for approved franchised educational programmes.
• Statutory income derived from members’ subscription fees received by trade associations.
• Prize money of sports victories received by the winners of individual athletes and teams through the Sports Victory Prize Scheme given by the Government through MSN.
• The following are exempted from Dividend Tax:

- Dividend income from abroad

- Dividend income distributed from the profits of companies that received pioneer status and reinvestment allowances;

- Dividend income paid, credited or distributed from the profits of shipping companies that is exempted from tax;

- Dividend income distributed by cooperatives;

- Dividend income declared by closed-end funds

- Dividend income received by residents from Labuan entities; and

- Any exemption given on dividend income at shareholder level.