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Calls to introduce a 2% wealth tax on Malaysia's wealthiest individuals appear to have been put on hold, at least for now
The Finance Ministry (MOF) told the Dewan Rakyat the government currently has no plans to introduce a wealth tax to finance government spending, arguing that such a measure would likely generate limited revenue after accounting for exemptions and reliefs.
In a written reply published on parliament's website on Wednesday, 15 July, the ministry said any proposal to introduce a wealth tax would require careful consideration, particularly given Malaysia's relatively small tax base.
"The implementation of a wealth tax, in whatever form or mechanism, must be carefully examined from various aspects, including Malaysia's relatively small and limited tax base," the ministry said.
It added that the government remains committed to ensuring Malaysia's tax policies are fair, targeted and progressive, while reducing socioeconomic inequality.
Instead of a wealth tax, the government says it's already taxing those with greater financial capacity
Rather than introducing a separate wealth tax, the ministry said it has chosen to expand existing measures targeting individuals with higher incomes and wealth.
These include:
- Capital gains tax on the disposal of unlisted shares.
- A dividend tax on annual dividend income exceeding RM100,000.
- Tax on profit distributions above RM100,000 received by partners in limited liability partnerships (LLPs).
According to MOF, these measures are designed to ensure those with greater financial capacity contribute more without introducing a separate wealth tax.
File photo of Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim.
Image via Mohd Rasfan/AFPThe idea of a 2% wealth tax surfaced earlier this year
The issue gained attention about two months ago after former Klang member of parliament (MP) Charles Santiago proposed introducing a 2% wealth tax on Malaysia's richest individuals.
He argued the tax could help address a RM10 billion fiscal shortfall following government spending cuts, FMT reported.
Santiago estimated the measure could raise more than RM1 billion, citing reports that the country's 50 richest individuals had collectively increased their wealth by RM103 billion in a year, bringing their combined fortunes to RM458 billion.
Business groups warned the tax could drive talent and capital overseas
Small and Medium Enterprises Association of Malaysia (SAMENTA) president William Ng described the idea as a "reactionary measure", arguing that higher taxes could encourage entrepreneurs, investors and skilled Malaysians to relocate to countries with more competitive tax regimes.
He told FMT that SME owners already contend with a 24% corporate tax and the dividend tax introduced under Budget 2025, warning that additional taxes could push productive Malaysians to move elsewhere.
Ng also claimed Malaysia was experiencing a "self-inflicted exodus" of talent, saying about 135,000 Malaysians leave the country annually for jurisdictions such as Singapore.
Figures from the World Bank and TalentCorp estimate that around 1.86 million Malaysians currently live and work overseas, while Malaysia's brain drain rate stands at 5.5% of its working-age population.
Meanwhile, SME Association of Malaysia president Chin Chee Seong said neighbouring countries including Singapore, Thailand, Indonesia, and Vietnam are competing aggressively to attract investors and high-net-worth individuals.
Instead of introducing new taxes, he suggested Malaysia should focus on reducing leakages, improving tax collection, broadening the tax base fairly, and creating stronger incentives for wealthy individuals and businesses to reinvest in the country.
