Malaysia’s Deputy Minister of Finance has presented the Finance Bill 2024 and the Labuan Business Activity Tax (Amendment)(No. 2) Bill 2024 to the Parliament, on 19 November 2024, proposing amendments to the Income Tax Act 1967 (ITA), Real Property Gains Tax Act 1976 (RPGT Act), Stamp Act 1949, Finance Act 2012, Finance (No. 2) Act 2023, and the Labuan Business Activity Tax Act 1990 (LBATA), among others.

The key provisions of the Acts are as follows:

Income Tax Act 1967 (ITA)

  • Starting in 2025, a 2% tax will be imposed on dividend income over MYR 100,000 for individual shareholders in Malaysia.
  • For capital gains tax under section 15C of the ITA, shares of the relevant company acquired before 1 January 2024 will have their acquisition price set as the acquisition price of the real property company under the RPGT Act.
  • For the year of assessment (YA) 2025, companies, limited liability partnerships, cooperatives, or trusts can submit revised tax estimates if the Director General issues a direction before the 11th month of the basis period for that YA.

Global Minimum Tax

  • As Malaysia has adopted International Financial Reporting Standards, the term “Acceptable Financial Accounting Standard” has been updated to exclude “Malaysia”.
  • The definitions of “investment entity” and “marketable transferable tax credit” have been updated to include insurance investment entities and align with amendments to the GloBE Model Rules, respectively.
  • For the domestic top-up tax, the net income or loss of a constituent entity in Malaysia will be based on its financial statements, prepared according to Malaysia’s accounting standards.
  • If a Malaysian entity is a permanent establishment of a main entity, it must comply with reporting requirements if the main entity prepares separate financial statements for it.
  • The computation of the carrying value for an eligible tangible asset will include impairment loss.

Labuan Business Activity Tax Act 1990 (LBATA)

  • Shipping operations are no longer considered “Labuan trading activity.”
  • The “basis period” is now based on the current year instead of the preceding year.
  • In 2025, two YAs will exist: one for the period ending in 2024 and another for the period ending in 2025.
  • Starting in YA 2025, Labuan entities will use a self-assessment system.
  • Labuan entities must submit their tax returns electronically within seven months after the end of their accounting period.

Stamp Act 1949

  • Ad valorem duty applies to real property exchanges in sales.
  • The new late stamping penalty for instruments is MYR 50 or 10% of the deficient duty if stamped within three months after the deadline, and MYR 100 or 20% if stamped after that period.

Real Property Gains Tax Act 1976 (RPGT) 

  • RPGT is applied individually on gains from each real property sale.
  • Allowable losses from a disposal of an asset chargeable in a YA can only be used to deduct gains from another sale of an asset within the same year.