(Tax Update) Malaysia Budget 2025 - Companies (What SMEs Need to Know)

Dear Valued Clients,

The latest tax updates offer fresh opportunities for businesses to maximize savings. If you’re planning your 2025 budget or strategizing future business expenses, this is the perfect time to explore the new and extended deductions and allowances.

Here’s a breakdown of the latest tax changes you shouldn’t miss:

1. Childcare & Elderly Care Allowance for Employees

What’s New? The current childcare allowance is now extended to cover elderly care for parents or grandparents.
When? Starting from YA 2025.

2. Smart AI-Driven Reverse Vending Machine (RVM)

What’s New? Sponsorship or contributions towards these smart recycling machines are now tax-deductible for an additional 2 years.
Effective Period: 1 January 2025 – 31 December 2026.

3. Encouraging Flexible Working Arrangements (FWA)

Additional Deduction: Enjoy 50% extra deduction on capacity-building costs and software acquisition for FWA.
How Much? Up to RM500,000, applicable as a one-off deduction.
Who Qualifies? Your application must be acknowledged by Talent Corporation Malaysia Berhad.
When to Apply: Between 1 January 2025 and 31 December 2027.

4. Care Leave for Employees

Tax Relief: Employers offering up to 12 months of additional paid leave to employees caring for sick or disabled family members will enjoy 50% additional deduction.
When to Apply: Submit applications to Talent Corporation Malaysia Berhad from 1 January 2025 to 31 December 2027.

5. Hiring Women Returning to Work

Incentive: A 50% additional deduction on employment costs for hiring women re-entering the workforce.
Eligibility Period: 12 months.
When to Apply: Applications open from 1 January 2025 to 31 December 2027 via Talent Corporation Malaysia Berhad.

6. Developing New Courses at Private Educational Institutions

Faster Deduction: Now you can deduct the full cost of developing new courses in the same year of assessment, instead of spreading it over 3 years.
Who Benefits? Private education institutions and TVET training institutes.
When? Effective from YA 2025 until YA 2030.

7. Accelerated Capital Allowance (ACA) for ICT Investments

Shorter Deduction Period: You can now claim ACA over 2 years instead of 3.
Allowances: 20% Initial Allowance (IA) and 40% Annual Allowance (AA).
When?
- YA 2024 to YA 2025
- YA 2025 to YA 2027

These incentives reflect the government’s support for sustainable business practices, inclusive hiring, and workplace flexibility. We encourage you to plan ahead to take advantage of these savings and apply on time where necessary.

If you need further guidance on how these incentives could benefit your business or help with TalentCorp applications, our team is ready to assist. Contact us today to start planning your tax strategy for 2025.

Past Update on Budget 2025

Dividend Income : https://www.ktp.com.my/blog/2percent-tax-dividend-income-above-rm100k/17oct2024
HR : https://www.ktp.com.my/blog/malaysia-budget-2025-hr/23oct2024

PS : Authored by Ms Lim Nguan Lian, our head of client relationship, on her personal LinkedIn.

Best regards
KTP Team
www.ktp.com.my

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