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The Inland Revenue Board (LHDN) has confirmed that the Employees Provident Fund (EPF), Amanah Saham Nasional Bumiputera (ASNB), the Armed Forces Fund Board (LTAT) and unit trust funds are exempted from the new 2% dividend tax
The new 2% tax on dividend income was introduced in the 2025 Budget, targeting individuals earning over RM100,000 annually.
According to The Star, these payments do not count towards the RM100,000 threshold or require declaration in your tax forms.
The 2% dividend tax aims to make the system more progressive, ensuring high-income earners contribute more to the national coffers
LHDN noted that the requirement to declare this income includes dividends received through nominee arrangements.
Capitalisation and reporting must be accurate to avoid unwanted attention from the taxman.
The tax applies to profits paid to individual shareholders, whether resident or non-resident.
The government aims to close loopholes where business owners take dividends instead of salaries to avoid higher tax brackets.
Dividends sourced from outside Malaysia and those from companies with pioneer status remain exempted
Shipping companies, cooperatives, and closed-end funds also get a pass.
Limited Liability Partnership (LLP) profit distributions will be subject to this treatment starting from the 2026 Year of Assessment. You must declare both sources if they exceed the threshold.
For those without business income, the 2025 Year of Assessment filing deadline is 30 April 2026. Those using e-Filing have a grace period until 15 May 2026 to submit their digital paperwork.
Meanwhile, business owners and those with business income (Form B) have until June 30 to file manually, or July 15 if filing electronically.
