As we approach the end of 2024, taxpayers in Malaysia are eagerly awaiting the announcements of Budget 2025. With a focus on providing relief and fostering economic growth, this budget
is set to introduce several significant changes that could impact your financial landscape. Let’s delve into the highlights of Budget 2025, exploring how the new measures will affect you and what you need to know for strategy planning.
For Individual Taxpayers
1. Dividend Tax
One of the notable changes in Budget 2025 is the introduction of the 2% Dividend Tax. Individual taxpayers will be subject to a rate of 2% on chargeable dividend income. However, it’s important to note that
this dividend tax is only applicable to investors with annual dividend income exceeding RM100,000. Investors with dividend income below this threshold will not be subject to the dividend tax.
2. Medical and Education Insurance Relief
Another significant update is the increase in the tax relief for medical and education insurance, which has remained unchanged for the past 24 years. Previously capped at RM3,000, the relief has now been increased to a maximum of RM4,000 for 2025. This enhancement encourages individuals to invest in more comprehensive medical and
education insurance, allowing for greater financial relief in these areas. With rising healthcare costs and the importance of quality education, this change is particularly timely.
3. Loan Interest Relief for First-Time Home Buyers
The announcement of tax relief on housing loan interest payments will be particularly beneficial for first-time home buyers in Malaysia. Eligible buyers who purchase residential properties can now claim special relief of up to RM7,000 on loan interest payments. This relief can be claimed for three consecutive years of assessment on sales
and purchase agreements executed between 1 January 2025 and 31 December 2027.
1. Accelerated Capital Allowance
To encourage taxpayers to fully implement e-Invoicing, it is proposed that the expenses for the purchase of ICT equipment, computer software packages, and consulting fees be given an accelerated capital allowance that can be fully claimed within a period of two years. This applies from the year of assessment 2024 until the year of
assessment 2025.
2. Additional Tax Deduction for Hiring Women Returning to Work
In an effort to increase women’s participation in the workforce, it is proposed that a 50% further deduction be given to employers on employment expenses paid for a period of 12 months for hiring women returning to work.
3. Flexible Working Arrangements (FWA)
To further encourage more employers to offer flexibility to employees and create a work-life balance, it is proposed that expenses for capacity building and software acquisition incurred by employers for implementing FWA be given a 50% further deduction. The expenses eligible for further deduction
are capped at RM500,000, subject to a one-off claim and verification by Talent Corporation Malaysia Berhad.
In conclusion, Budget 2025 introduces a range of impactful measures designed to support individual taxpayers and business owners in Malaysia. As we look ahead to the implementation of these measures, understanding their implications will be crucial for navigating the financial landscape in 2025 and beyond.
