FINANCE ACT 2025

Finance A BILL LAWS OF MALAYSIA Act 874 FINANCE ACT 2025 1 2 Laws of Malaysia Act 874 Date of Royal Assent ... ... 27 December 2025 Date of publication in the Gazette ... ... 31 December 2025 Publisher’s Copyright C PERCETAKAN NASIONAL MALAYSIA BERHAD All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording and/or otherwise without the prior permission of Percetakan Nasional Malaysia Berhad (Appointed Printer to the Government of Malaysia). Finance LAWS OF MALAYSIA Act 874 FINANCE ACT 2025 ARRANGEMENT OF SECTIONS Chapter I PRELIMINARY Section 1. Short title 2. Amendment of Acts Chapter II AMENDMENTS TO THE INCOME TAX ACT 1967 3. Commencement of amendments to the Income Tax Act 1967 4. Amendment of section 6 5. Amendment of section 15c 6. Amendment of section 46 7. Amendment of section 49 8. Amendment of section 50 9. New section 54c 10. Amendment of section 65c 11. Amendment of section 65d 12. Amendment of section 65f 13. New section 76a 14. Amendment of section 107c 15. Special provision relating to section 107c 16. Amendment of section 111 17. Amendment of Schedule 1 18. Amendment of Schedule 6 3 4 Laws of Malaysia Act 874 Chapter III AMENDMENTS TO THE REAL PROPERTY GAINS TAX ACT 1976 Section 19. Commencement of amendments to the Real Property Gains Tax Act 1976 20. Amendment of section 7 21. Special provision relating to section 7 22. Amendment of section 21 23. Amendment of section 21b 24. Amendment of section 24 Chapter IV AMENDMENTS TO THE STAMP ACT 1949 25. Commencement of amendments to the Stamp Act 1949 26. Amendment of section 2 27. Amendment of section 21 28. New section 80c 29. Amendment of First Schedule 30. Amendment of Third Schedule Chapter V AMENDMENT TO THE LABUAN BUSINESS ACTIVITY TAX ACT 1990 31. Commencement of amendment to the Labuan Business Activity Tax Act 1990 32. Amendment of section 12 Chapter VI AMENDMENT TO THE PETROLEUM (INCOME TAX) ACT 1967 33. Commencement of amendment to the Petroleum (Income Tax) Act 1967 34. Amendment of section 50 5 Finance LAWS OF MALAYSIA Act 874 FINANCE ACT 2025 An Act to amend the Income Tax Act 1967, the Real Property Gains Tax Act 1976, the Stamp Act 1949, the Labuan Business Activity Tax Act 1990 and the Petroleum (Income Tax) Act 1967. [ ] ENACTED by the Parliament of Malaysia as follows: Chapter I PRELIMINARY Short title 1. This Act may be cited as the Finance Act 2025. Amendment of Acts 2. The Income Tax Act 1967 [Act 53], the Real Property Gains Tax Act 1976 [Act 169], the Stamp Act 1949 [Act 378], the Labuan Business Activity Tax Act 1990 [Act 445] and the Petroleum (Income Tax) Act 1967 [Act 543] are amended in the manner specified in Chapters II, III, IV, V and VI respectively. 6 Laws of Malaysia Act 874 Chapter II AMENDMENTS TO THE INCOME TAX ACT 1967 Commencement of amendments to the Income Tax Act 1967 3. (1) Sections 4, 7, 8, 9, 17 and 18, and subparagraphs 6(a)(i), (ii), (iii) and (iv) have effect for the year of assessment 2026 and subsequent years of assessment. (2) Subparagraph 6(a)(v) and paragraph 6(c) have effect for the year of assessment 2026. (3) Subparagraph 6(a)(vi) and paragraph 6(b) have effect for the years of assessment 2026 and 2027. (4) Sections 5, 10, 11, 12, 13 and 16 come into operation on 1 January 2026. (5) Section 14 has effect for the year of assessment 2028 and subsequent years of assessment. (6) Section 15 has effect for the year of assessment 2027. Amendment of section 6 4. The Income Tax Act 1967, which is referred to as the “principal Act” in this Chapter, is amended in subsection 6(1)— (a) in paragraph (r), by substituting for the full stop at the end of the paragraph a semicolon; and (b) by inserting after paragraph (r) the following paragraph: “(s) income tax shall be charged for each year of assessment upon the income of an individual, who is a partner of a limited liability partnership, which consists of profits derived from Malaysia paid, credited or distributed, whether in cash or in kind, to the individual by the limited liability partnership at the appropriate rate as specified in Part XXIII of Schedule 1.”. Finance 7 Amendment of section 15c 5. Subsection 15c(4a) of the principal Act is amended by inserting after the words “applies, the acquisition price” the words “of the shares”. Amendment of section 46 6. Section 46 of the principal Act is amended— (a) in subsection (1)— (i) in the proviso to paragraph (c), in paragraph (ca), by substituting for the words “any vaccination” the words “any vaccination of a vaccine registered with the National Pharmaceutical Regulatory Agency”; (ii) in the proviso to paragraph (g), by substituting for paragraph (d) the following paragraph: “(d) for the purposes of subparagraph (iii), the vaccination which qualifies for deduction shall be vaccines registered with the National Pharmaceutical Regulatory Agency;”; (iii) in paragraph (ha), by substituting for the words “limited to a maximum of six thousand ringgit” the words “limited to a maximum of ten thousand ringgit”; (iv) by substituting for paragraph (r) the following paragraph: “(r) an amount limited to a maximum of three thousand ringgit expended or deemed to have been expended under subsection (3) in that basis year by the individual on the amount expended for the payment of child care fees to— (i) a child care centre registered under the Child Care Centre Act 1984 [Act 308] or a kindergarten 8 Laws of Malaysia Act 874 registered under the Education Act 1996 [Act 550] for a child of the individual aged six years and below; or (ii) a care centre registered under the Care Centres Act 1993 [Act 506] for a child of the individual aged twelve years and below: Provided that— (a) w h e r e a w i f e l i v i n g together with her husband is assessed separately for that year, the deduction under this paragraph shall only be allowed either to the husband or to the wife; (b) the claim is evidenced by a receipt issued by the child care centre, kindergarten or care centre; and (c) the maximum amount of deduction under this paragraph shall apply notwithstanding that the individual may have more than one child;”; (v) by inserting after paragraph (s) the following paragraph: “(sa) an amount limited to a maximum of one thousand ringgit expended or deemed to have been expended under subsection (3) in that basis year by the individual as evidenced by a receipt on the amount expended for the payment of entrance fee to a tourist attraction, or for a cultural and arts programme;”; and Finance 9 (vi) by substituting for paragraph (v) the following paragraph: “(v) expenses expended in that basis year by the individual— (i) for the payment of installation, rental, purchase including hire-purchase of equipment or subscription for the use of electric vehicle charging facility for his own vehicle and not being used for the purposes of his own business for each basis year for the years of assessment 2023, 2024, 2025, 2026 and 2027; (ii) for the purchase of food waste compost machine used for the household purpose of the individual for the years of assessment 2025, 2026 and 2027; (iii) for the payment of installation or for the purchase of food waste grinder machine used for the household purpose of the individual for the years of assessment 2026 and 2027; or (iv) for the payment of installation or for the purchase of closed-circuit television used for the household purpose of the individual for the years of assessment 2026 and 2027;”; (b) by inserting after subsection (1) the following subsection: “(1a) The expenses referred to in paragraph (1)(v) are subject to the following: (a) the claim is evidenced by a receipt issued in respect of the payment or purchase, as the case may be; 10 Laws of Malaysia Act 874 (b) the deduction under subparagraph (1)(v)(ii) shall be claimed once either in the year of assessment 2025, 2026 or 2027; (c) the deduction under subparagraphs (1)(v)(iii) and (iv) shall be claimed once either in the year of assessment 2026 or 2027; and (d) the total amount of deduction under this paragraph is subject to a maximum amount of two thousand five hundred ringgit.”; and (c) in subsection (3), by inserting after the words “(s),” the words “(sa),”. Amendment of section 49 7. Section 49 of the principal Act is amended— (a) by inserting after subsection (3) the following subsection: “(3a) A deduction under subsection (1) shall be allowed where an insurance under subsection (3) is contracted for by an individual on the life of the child of the individual.”; and (b) by inserting after subsection (4) the following subsections: “(5) A child in this section is a child— (a) under the age of eighteen years and unmarried; (b) who attains the age of eighteen years and above, unmarried and is receiving full-time instruction at any university, college, school or other similar educational establishment; Finance 11 (c) who is unmarried and is serving under articles or indentures with a view to qualifying in a trade or profession; or (d) who is unmarried and physically or mentally disabled in accordance with any written law. (6) For the purposes of this section, a child of an individual or his wife refers to a legitimate child or step-child of his or his wife, or a child adopted by the individual or his wife in accordance with any written law.”. Amendment of section 50 8. Subsection 50(2) of the principal Act is amended by inserting after the words “subsection 49(3),” the words “insurance referred to in subsection 49(3a),”. New section 54c 9. The principal Act is amended by inserting after the deleted section 54b the following section: “Special treatment on distribution of profits by limited liability partnership 54c. (1) Where in the basis period for a year of assessment, an individual who is a partner of a limited liability partnership has income which consists of profits derived from Malaysia which is paid, credited or distributed, whether in cash or in kind, to the individual by the limited liability partnership in excess of one hundred thousand ringgit, the income is deemed to be the statutory income of the individual for the basis period for that year of assessment. (2) Where the profits under subsection (1) consist of profits in kind, the profits shall be taken to consist of an amount equal to the market value of the profits in kind at the time of the distribution of the profits.”. 12 Laws of Malaysia Act 874 Amendment of section 65c 10. Section 65c of the principal Act is amended by substituting for the definition of “disposal” the following definition: ‘ “disposal” means— (a) to sell, convey, transfer, assign, settle or alienate whether by an agreement or any written law; (b) an extinguishment of any rights due to the dissolution or winding up of a company; or (c) a reduction of share capital, conversion of shares, redemption of shares, purchase by a company of its own shares or ownership of the capital asset ends.’. Amendment of section 65d 11. Subsection 65d(1) of the principal Act is amended by inserting after the words “capital asset” the words “situated in Malaysia or disposal of shares referred to in section 15c”. Amendment of section 65f 12. Section 65f of the principal Act is amended— (a) by substituting for subsection (3) the following subsection: “(3) For the purposes of this section, the date of completion of a disposal shall be— (a) the date on which the ownership of the capital asset disposed of is transferred by the disposer, ownership of the capital asset by the disposer ends, or the rights are extinguished due to the dissolution or winding up of a company; or Finance 13 (b) the date on which the whole of the amount or value of the consideration for the disposal, whether in cash or in kind, has been received by th