Publish Date
Dec 11, 2024
Tax Compass
In Malaysia’s recently announced 2025 budget (the Budget) [1], the government introduced measures to help reduce the country’s deficit to 3.8 percent in 2025 while boosting revenue from RM322 billion in 2024 to RM340 billion in 2025. To support this plan, Malaysia Budget 2025 focused on expanding the scope of existing taxes and outlined a plan to launch a new Investment Incentive Framework for attracting high-value investments.
At the same time, the government expressed its readiness to implement global minimum tax (GMT) on MNEs. While GMT will yield additional revenue for the exchequer, to mitigate the effects of GMT the government agreed to focus on improving existing incentives, create new non-tax incentives, as well as assess the feasibility of introducing strategic investment tax credits.
Investors should start evaluating the financial and non-financial impact of various tax measures announced in Budget 2025. Larger corporates, especially multinational enterprises (MNEs) that are currently enjoying tax incentives in Malaysia, should also assess the implications of the proposed GMT and BEPS development globally and engage with tax authorities as early as possible to discuss and evaluate the efficacy of their existing tax incentive package.
Summary of few key corporate and personal tax measures announced in Budget 2025 are outlined below:
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Budget 2025 reflects Malaysia’s commitment to economic reform and its focus on attracting high-value investments, particularly in advanced sectors such as digitalization, green technologies and special economic zones. Additionally, Malaysia’s strategic location, skilled workforce, supportive government, and thriving tech ecosystem create exceptional business opportunities, positioning Malaysia as an ideal destination for businesses to thrive in the heart of Southeast Asia.
If you need to deep dive on any aspects of the Budget 2025 proposal or discuss opportunities of doing business in Malaysia, please contact us.
Important: The above is a discussion of the key tax measures announced in the Malaysia Budget 2025. These are subject to final legislation, the enactment of which may lead to a different outcome or result from the statements herein.