Budget 2026 introduced targeted tax adjustments aimed at broadening the tax base, supporting investment and easing cost pressures for selected groups. Consulting a qualified accounting firm in Kota Kinabalu enables precise application of these measures to individual and business circumstances. The changes take effect mainly from the year of assessment 2026 or 1 January 2026 onwards.
Key measures for businesses
Profit distributions received by individual partners from limited liability partnerships (LLPs) that exceed RM100,000 in a year are subject to a 2% tax on the chargeable amount from YA 2026. Partners must self-declare these amounts in their personal tax returns.
The exemption for foreign-sourced dividends and capital gains brought into Malaysia has been extended to 31 December 2030. Previously available to resident companies and limited liability partnerships (LLPs), the relief now also covers resident co-operative societies and trust bodies.
Stamp duty exemption for employment (Also see Mistakes To Avoid When Filing Self-employed Income) contracts now covers employees earning monthly wages of up to RM3,000, increased from the previous threshold of RM300, and applies to contracts executed from 1 January 2026. This change helps reduce employment-related costs for many SMEs.
For residential property transfers, the fixed stamp duty rate for instruments executed by non-citizen individuals, excluding permanent residents, and foreign companies has increased from 4% to 8%, effective 1 January 2026. From the same date, stamp duty will also be fully administered under a self-assessment system.
Additional support includes accelerated capital allowances for qualifying expenditure, a 50% further tax (Also see What Business Owners Must Know about Corporate Tax in Malaysia?) deduction for SME spending on approved AI and cybersecurity training (applications in 2026–2027), and tourism-related incentives linked to Visit Malaysia 2026. A carbon tax is scheduled for introduction in 2026, initially targeting the iron, steel and energy sectors.
Key measures for individuals
Several personal tax (Also see Understanding Withholding Tax in Malaysia) reliefs have been expanded. The RM1,000 relief for vaccination expenses now covers all vaccines registered and approved by the Ministry of Health. Childcare relief of RM3,000 extends to children up to age 12 attending registered day-care or after-school centres. Relief for assessment, diagnosis and early intervention or rehabilitation for children with learning disabilities rises to RM10,000. Life insurance or takaful relief now includes premiums paid for children. A special RM1,000 relief is available for domestic tourism and cultural programme expenses, while the environmental sustainability relief of RM2,500 includes purchases such as household food waste grinders.
The 2% tax on LLP profit distributions also applies to individual partners, and the higher 8% stamp duty rate affects non-citizen buyers of residential property.
These changes reward compliance, digital readiness and selected investments while raising obligations in specific areas. Businesses (Also see Choosing the Right Business Structure in Malaysia: Sdn Bhd vs Enterprise) and individuals should review their structures, documentation and planned transactions against the latest gazetted orders and LHDN guidelines to ensure correct application and timely compliance.