From taxation to benefits, master all of Malaysia's 2025 new policies!

Content Language: Chinese

Out with the old, in with the new - Malaysia will implement a series of new measures starting next year. This brings both joy and sorrow to the general public and the business community, with many measures directly impacting everyone's future prospects and financial outlook.

These new measures have a wide coverage, including the highly anticipated initiatives by the LBX Pharmacy Chain Joint Stock such as gradually expanding the scope of sales and service taxation, implementing targeted subsidies for RON95 gasoline, providing assistance funds, and personal tax exemptions.

As for the business sector, what concerns business owners the most are a series of measures that may increase operating costs, including raising the minimum wage, promoting multi-tier levies on foreign workers, and mandating foreign workers to contribute to the provident fund, which could ironically be a timely policy that brings joy to employees.

The government's intention is to increase support for the middle and lower income cohort, and through raising the minimum wage and expanding cash assistance programs, to improve the quality of life for more citizens.

The Malaysian government will introduce several new measures next year, including those aimed at promoting economic development and attracting investments.

To further stimulate the domestic economy, the new measures also include providing more tax relief for small and medium-sized enterprises to assist them in releasing more funds for the daily operation and development of the business, including equipment procurement, expanding production, or hiring more employees.

The government also hopes that through these initiatives, it can support small and medium enterprises in creating new employment opportunities, injecting vitality into the labor market, and simultaneously reducing the unemployment rate.

Additionally, many of the new measures proposed in the 2025 fiscal budget have a significant impact.

The government has decided to increase the minimum wage from RM 1500 to RM 1700 starting from February 1st next year.

The government has also decided that employers with less than 5 employees can postpone the implementation of the minimum wage of 1700 Ringgit for 6 months, which will only come into effect on August 1 next year.

In addition, the government will allocate 0.2 billion Ringgit for the progressive wage scheme, benefiting an estimated 0.05 million employees.

Malaysia will fully implement the e-invoicing measures from July 1 next year. The government has been providing tax deductions for e-invoicing-related expenses since last year, with the tax incentive period lasting from 2024 to 2027.

This is aimed at improving tax collection efficiency. The government also plans to provide subsidies for the purchase of electronic devices, computer software packages, and consultancy fees, requiring businesses to declare all expenses within two years.

According to reports, small traders with a monthly income of 4200 Ringgit (annual income exceeding 0.05 million Ringgit) and micro-enterprises can apply for a maximum of 5000 Ringgit in e-invoicing and digitalization cost subsidies.

The Micro, Small, and Medium Enterprises Digitalization Grant Scheme also provides a half-price subsidy for the purchase of e-invoicing related services such as telecommunications data, cloud, systems, software, and other packages for micro and small enterprises.

Starting next year, the allocation of Mercy Assistance Fund (STR) and Mercy Basic Assistance Fund (SARA) will increase from 10 billion Ringgit to 13 billion Ringgit, benefiting approximately 9 million citizens, equivalent to 60% of the adult population in our country.

The government's additional allocation of 3 billion Ringgit will increase the assistance received by families from 3700 Ringgit this year to 4600 Ringgit next year.

In the Mercy Assistance Fund family category, around 4.1 million beneficiaries will receive 100 Ringgit of Mercy Basic Assistance Fund per month starting next year; this year, only 0.7 million beneficiaries were eligible.

In addition, single individuals will receive 600 Ringgit under the Mercy Assistance Fund.

The government allocated 0.8 billion Ringgit to provide back-to-school assistance to 5.2 million students from first to fifth grade.

The government also increased the allocation for the Food Subsidy Program (RMT) to 0.87 billion Ringgit, benefiting 0.86 million students.

The Poor Students Trust Fund has increased from the original 0.150 billion Ringgit to 0.180 billion Ringgit.

In addition, the government has allocated a special grant of 10 million Ringgit as financial aid for 687 inland schools. The government has also agreed to increase the living allowance for Bachelor's degree students at teacher training colleges from 430 Ringgit per month to 530 Ringgit.

To encourage more informal employees and those without fixed income to save for retirement, the government's matching contribution subsidy under the voluntary EPF contribution plan (i-Saraan) will be increased from the current 15% to 20%. The annual maximum matching amount can reach 500 Ringgit, with a lifetime cumulative maximum limit of 5,000 Ringgit.

As for the Social Security Scheme for self-employed individuals, the government will cover up to 70% of the contribution fee, allocating 0.1 billion Ringgit for this purpose. This measure also prepares for making it mandatory for self-employed individuals to renew their professional licenses next year by paying the fee.

The government is planning to implement targeted subsidies for RON95 gasoline in the middle of next year.

However, the government is still discussing the full implementation mechanism, including the possibility of emulating the diesel subsidy mechanism, refueling through diesel subsidy cards (Fleet Card) or personal identity cards.

To expand the tax base, the government will impose a 2% dividend tax on individual dividend income exceeding 0.1 million Ringgit starting next year.

After the implementation of this tax system, the government will no longer solely rely on contributions from salary earners but can also generate income from business owners and stockholders worth millions of Ringgit.

This dividend tax does not apply to four institutions, namely the Employees Provident Fund Board, the Armed Forces Fund Board, the National Trust Fund Company, and any trust unit.

The government plans to expand the scope of service tax and review the sales tax from May 1st of next year.

This includes imposing taxes on imported high-end goods (such as avocados and salmon) and business service transactions between enterprises (such as fee-based banking services). Essential food items purchased by the general public will not be subject to sales tax.

In addition, the scope of service tax will be expanded to cover commercial services such as fee-based financial services.

The government is expected to start imposing multi-tiered head taxes on foreign workers to enterprises from January next year, to reduce reliance on foreign workers, and all tax revenues collected will be returned to the industry to promote industrial automation and mechanization.

This tax system is based on the number of foreign workers employed by the company to determine the amount of head tax the employer should pay. The government will use the tax revenue collected from the multi-tiered head tax on foreign workers to improve the skills of local employees, especially those from small and medium-sized enterprises.

After the implementation of the multi-tiered head tax system for foreign workers, employers who rely more on foreign workers may need to pay more for foreign workers.

Starting January 1st next year, Malaysia will gradually increase the consumption tax on sugary drinks, adding 40 cents per liter, to support the 'anti-sugar movement'.

In order to promote the 'Healthy Malaysia' national agenda, the government has allocated 27 million Ringgit to promote sports and leisure activities for the cohort, including organizing the 'National Sports Day' to enhance public health awareness.

The government will provide a total of 1.7 billion and 90 million Ringgit in funding to enhance financing and export capabilities for small and medium enterprises, and will provide a 60% investment tax relief for smart logistics companies for a period of 5 years.

The Treasury will introduce a 1 billion Ringgit medium-sized enterprise program to support local enterprise capacity building and provide financing.

In addition, to encourage local exporters to expand their overseas business, Export-Import Banks will cooperate with exporters on a sustainable development incentive program, providing a funding of 0.7 billion and 50 million Ringgit.

MATRADE will also provide a 40 million Ringgit refund grant to assist Malaysian exporters in promoting locally manufactured products and services on the international stage, especially for exploring new markets in Africa, Latin America, and the Middle East.

The individual tax relief for the National Education Savings Scheme (SSPN) will be extended for another 3 years. Currently, the maximum individual income tax relief under this scheme is 8000 Ringgit. Parents applying for tax relief need to note that the relief amount can only be applied by either the father or the mother, and the maximum application amount remains at 8000 Ringgit.

The government will also provide up to 5000 Ringgit in matching grants for students whose family income is less than 6000 Ringgit and who have accounts with SSPN, further reducing the education burden on low-income families.

In addition, the personal income tax relief for nursery or kindergarten fees will be extended until 2027, with parents eligible for a maximum tax relief of 3000 Ringgit.

Starting from January 1st next year, first-time homebuyers will enjoy a personal income tax relief of up to 7000 Ringgit on housing loan interest for 3 consecutive years.

For houses priced below 0.5 million Ringgit, the maximum tax relief is 7000 Ringgit, and for houses priced between 0.5 million and 0.75 million Ringgit, the maximum tax relief is 5000 Ringgit.

This relief can be applied for continuously on the house purchase agreement between January 1st next year and December 31st, 2027 for 3 consecutive years.

Starting from January 1 next year, the Malayan Railways (KTMB) will fully implement cashless transactions for ticket purchases in the Klang Valley, northern Malaysia, southern Malaysia, and the East Coast region.

This move aims to create a more efficient and competitive society, aligning with the government's vision towards digitization.

In order to provide a safer Internet world for children and families, all social media and Internet communication platform companies operating in Malaysia must apply for an Application Services Provider Category License starting from January 1 next year.

The Malaysian Communications and Multimedia Commission introduced a new regulatory framework related to Internet safety for children and families on August 1 this year, which will come into effect on January 1 next year.

Under this new framework, social media and Internet communication platforms with at least 8 million registered users must apply for an Application Services Provider Category License in accordance with the 1998 Communications and Multimedia Act.

Starting from January 1 next year, tourists staying in Perak state will be required to pay a local service fee of 3 Ringgit per night.

Related fees will apply to all lodging service providers, including hotels, guesthouses, and short-term rental platforms such as Airbnb.

Starting next year, a total of 103 sports projects will enjoy tax deductions, with tax relief of up to 1000 Ringgit.

With the number of sports projects regulated under the 1997 Sports Development Act increasing from 51 to 103, participating in training or courses for esports, equestrian, swimming, motor sports, taekwondo, and others will be eligible for up to 1000 Ringgit in tax relief when filing taxes next year.

In addition to purchasing equipment for the 103 sports projects (excluding electric bikes), individuals can enjoy personal income tax relief for participating in domestic and international sports activities including running competitions, renting sports facilities, sports training fees, and gym membership fees.

Beginning January next year, 63 Chinese independent schools in Malaysia will directly receive the federal government's annual subsidies without the need to apply or provide additional documentation.

Previously, the boards of Chinese independent schools had to visit the Ministry of Education during the Chinese New Year period to collect subsidy checks. However, starting next year, the Ministry of Education will inform the boards directly and automatically distribute the subsidy checks.

Starting from January 1 next year, the heritage tax for lodgings and hotels in Malacca (Caj Warisan) will be raised from 2 Ringgit per room to 3 to 5 Ringgit.

According to the notification issued by the Malacca Hotel Industry Association sent by the Malacca state government, the latest charges for various types of accommodation rooms are as follows: 1 to 3 Orkid, 1-star to 2-star hotels, Kampungstay, Townstay, Resort/Chalet are 3 Ringgit per night; 3-star and 4-star hotels are 4 Ringgit per night; while 5-star hotels are 5 Ringgit per night.

Starting from January 1, 2025, the government will impose a global minimum tax on multinational companies with global annual incomes exceeding 0.750 billion euros (approximately 3.5 billion Ringgit) and subsidiaries in different countries.

This 15% global minimum tax rate is expected to have a positive impact on the country's financial situation. It will not only help attract new multinational investments but also enhance investors' confidence in the country's tax policies.

The government will continue to implement the Green Electricity Tariff Program next year, with a minimum quota of 6600 kilowatt-hours and maintaining the same rates, namely 10 cents per kilowatt-hour for low voltage users, and 20 cents per kilowatt-hour for medium and high voltage users.

The government will also open long-term ordering options, allowing users to subscribe to green electricity plans until 2027.

Furthermore, in order to meet the environmental, social, and governance (ESG) commitments of corporate companies, the government has decided that users who subscribe to green electricity plans next year will not be charged the Imbalance Cost Pass-Through Mechanism (ICPT) fee, demonstrating that green energy is not affected by fuel price fluctuations.

The initial implementation date of the EU Zero Deforestation Regulation was set for December 30, 2024. However, due to the complexity of this regulation and the challenges faced by small and medium enterprises in meeting the requirements, the European Commission has proposed a 12-month delay.

With the proposal approved, the relevant implementation dates will be postponed to December 30, 2025 (for large enterprises) and June 30, 2026 (for small and medium enterprises).

Enforcement officers from the Malaysian Palm Oil Council will conduct surprise inspections on oil palm buyers starting early in 2025, to ensure the accuracy of weighing scales and protect the interests of small plantation owners.

Minister of Plantation Industries and Commodities Datuk Seri Zohari Abdul Ghani emphasized that each scale must be transparent and come with a complete receipt containing the actual information of the total weight, tonnage, and Oil Extraction Rate (OER) determined by the Ministry of Plantation Industries and Commodities.

For this reason, the authorities will require palm oil buyers or dealers to correct their weighing scales starting next year.