High-Income Shareholders To Be Taxed With 2% Dividend Tax

Business Today · Oct 18 21:27

The government is proposing to impose a 2% dividend tax on taxable dividend income as one of the broaden the tax base progressively.

The proposal was announced by Prime Minister Datuk Seri Anwar Ibrahim during the tabling of Budget 2025 yesterday at the Parliament where the dividend tax will be applicable to dividend income exceeding RM100,000 gained by individual shareholders from assessment year 2025.

"The tax will be imposed on individual shareholders, including residents, non-residents, and individuals holding shares through nominees.

"The dividend tax, however, does not apply to profit distributions made to contributors and depositors of the Employees Provident Fund, the Armed Forces Fund Board, Amanah Saham Nasional Bumiputera or any unit trusts," Anwar said.

Additionally, the Finance Ministry (MOF), in an appendix released alongside the Budget 2025 presentation, said exemptions are also granted to dividend income from foreign sources, dividends distributed from the profits of pioneer-status companies and reinvestment allowance, dividends paid, credited, or distributed from the profits of tax-exempted shipping companies and dividends distributed by cooperatives.

"Additionally, the exemptions will also apply to dividends declared by closed-end funds, dividends received by residents from Labuan entities and any pre-existing exemptions on dividends at the shareholder level," MOF added.

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High-Income Shareholders To Be Taxed With 2% Dividend Tax

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