2025 Budget: Tax Measures

The Prime Minister of Malaysia tabled the 2025 Budget yesterday. The total tax revenue is expected to increase by 7.5% in the fiscal year 2025, amid a reduction in the direct tax forecast for fiscal year 2024.

The tax measures that generate additional fiscal revenue include taxation of dividend income, expansion of the scope of goods and services subject to the Sales and Service Tax (“SST”) (being the consumption tax in Malaysia), carbon tax implementation in 2026 (coinciding with EU’s CBAM), increase in duties of sugar-sweetened beverages and adjustments to the duty & levy on crude palm oil.

At the same time, a new tax incentive framework is to be introduced amid the influx of new investments. The personal tax reliefs are expanded and extended to encourage savings, purchase of first home, caring for the elderly, early detection of medical conditions, and so on. Also, there are additional stamp duty exemptions, continued commitment to the success of a new special economic zone (Johor-Singapore SEZ), and an extension of foreign-source income exemption until the year 2036.

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