Malaysia

Limited liability partnership (LLP)’s profit distribution

Budget 2026 proposed a 2% tax on profit distributions from LLP received by individual partners (resident and non-resident) exceeding MYR100,000 per year, with effect from year of assessment 2026. The tax is imposed on the chargeable income from profit distributions after allowable relief and deduction.

Dividend tax

With effect from year of assessment 2025, annual dividend income exceeding 100,000 Malaysian ringgits (MYR) received by resident individuals, non-resident individuals, and individuals holding shares through nominees is subject to a 2% tax on the chargeable dividend income after eligible tax deductions. This tax applies to dividend income distributed by resident companies.

Expansion of scope of sales tax and service tax

Effective from 1 July 2025, the scope of sales tax and service tax will expand. Certain goods, including imported premium fishes, specific imported fruits, and specific materials to be used in the construction industry, previously exempted will be subject to sales tax at rates of 5% or 10%. Additionally, service tax will be expanded to include new taxable services, such as beauty services, education services, and private healthcare services for non-Malaysians, with rates of 6% or 8%.