SHAH ALAM, Oct 19 — Budget 2025, tabled by Prime Minister Datuk Seri Anwar Ibrahim in Parliament yesterday, put forth several tax incentives.
This includes exemptions and relief, wider scopes, and extensions of existing incentives, all aimed at furthering the development of sectors such as health and education and the people’s welfare.
The following are several changes the Madani government will implement next year.
SALES AND SERVICES TAX (SST)
— No SST on essential goods including rice, sugar, salt, flour, eggs, and oil.
— Premium imported goods such as salmon and avocado are subject to SST.
— Scope will be widened to include commercial services such as fee-based financial services, effective May 1.
— Government to hold engagement sessions with stakeholders before determining tax scope, rates.
— Changes to be made in progressive manner so as to not burden the public.
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People buy rice during the Dusun Tua Jualan Ehsan Rahmah programme, at Dewan Batu 16, Hulu Langat, on October 23, 2023. — Picture by REMY ARIFIN/MEDIA SELANGOR[/caption]
DIVIDEND TAX
— Dividends of over RM100,000 earned in the 2025 financial year are subject to a duty of 2 per cent, to be paid in 2026.
— This duty is exempt for dividend earnings from government funds, such as the Employees Provident Fund and unit trusts under Perbadanan Nasional Bhd, as well as foreign dividend earnings.
— This will diversify the government’s tax earnings and lower its dependence on salaried taxpayers.
INDIVIDUAL LEVY EXEMPTIONS
— Education and medical insurance premiums hiked to RM4,000 from RM3,000.
— Tax exemptions on treatment and rehabilitation for autistic children raised to RM6,000 from RM4,000.
— Medical expenses up to RM10,000 now include medical costs borne by taxpayers under insurance or takaful products.
— Relief for taxpayers with disabilities raised to RM7,000, relief for taxpayers with spouses with disabilities raised to RM6,000.
— Tax exemptions on foreign earnings extended until December 31, 2036.
— Income tax relief for private retirement scheme contributions and delayed annuity premiums until assessment year 2030.
— Duty exemptions based on net savings in the National Education Savings Scheme until 2027.
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Childcare worker Adibah Nor Mokles reads to children at the opening of the Frontline Workers’ Children’s Nursery at Darul Ehsan Building, Shah Alam, on February 18, 2021. — Picture by HAFIZ OTHMAN/MEDIA SELANGOR[/caption]
EDUCATION
— Wages from education-targeted institutions for their teachers will be considered welfare expenses.
— Tax relief for companies that donate equipment to public skills training institutes, polytechnics or vocational colleges registered between 2025 and 2027.
— Special tax exemptions for private higher learning institutions when they develop new courses in fields such as digital technology and artificial intelligence.
HOUSING
— Individual tax exemption of RM5,000 or RM7,000 on housing loan interests for first-time homeowners. This exemption is applicable for sales deals completed between January 1, 2025, and December 31, 2027, involving houses that cost between RM500,000 and RM750,000.
EMPLOYERS
— Tax exemptions of 50 per cent if they:
- Hire women returning to work for a year.
- Spend on implementing flexible working systems.
- Provide additional 12 months’ paid leave for employees who are caregivers for children or sick/disabled family members.
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State executive councillor for women empowerment and welfare Anfaal Shaari (second from left) visits exhibits at the Selangor Young Women Entrepreneur (Usahawanita) Icon’s Digital Media Incentive Programme Awards at Mardhiyyah Hotel and Suites, Shah Alam, on July 19, 2024. — Picture by NUR ADIBAH AHMAD IZAM/MEDIA SELANGOR[/caption]
SPORTS
— Income tax exemptions on cash rewards for athletes under the government’s Sports Victory Rewards Scheme through the National Sports Council.
HEALTH
— Excise duty on sugary beverages to rise by 40 sen to 90 sen per litre from January 1. In Budget 2024, the rate was hiked from 40sen to 50sen, covering carbonated drinks, flavoured milk, and fruit juice. This duty has been in effect since 2019.
— Tax exemptions on medical treatment for individuals, their spouses and their children will cover full health checkups, mental health consultations, and self-test kits/equipment.
— Tax relief on net donations to the Rare Diseases Fund.
CHARITY
— To encourage the people to donate towards efforts to aid Palestinians, tax exemptions on donations to charity organisations will cover donations to affected foreigners.
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Representatives from non-governmental organisation Nour el-Marifa deliver aid to schoolchildren in Gaza, Palestine, using the multipurpose vehicle bought with proceeds from the ‘Selangor Cares’ Humanitarian Fund. — Picture by GLOBAL PEACE MISSION MALAYSIA[/caption]
