Tax in Motion Issue 1/2025 - Budget 2026 Edition
10 Oct 2025
Welcome to our Tax in Motion Budget Edition which brings you the key tax proposals of Budget 2026 based on the Budget speech as announced by the Prime Minister and Finance Minister on 10 October 2025.
Highlights
- Foreign-sourced income exemption - Exemption on qualifying foreign-sourced income received in Malaysia is extended until 31 December 2030
- Tourism incentives - Eligible tourism operators are entitled to a 100% income tax exemption on incremental income in support of Visit Malaysia Year 2026
- AI incentive for MSMEs - Further deduction of 50% for qualifying expenditure on AI training to be given once in two years, subject to condition
- Expanded family-centred reliefs - Notably extending the childcare fee relief to registered centres for children up to 12 years and life insurance premiums or takaful contribution for children
- Tax on LLP’s profit distributions - Profit distributions to individual LLP partners exceeding RM100,000 will be taxed at 2%
- New Investment Incentive Framework - Implementation for manufacturing sector commences in first quarter of 2026, followed by services sector in second quarter of 2026
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Tax in Motion Issue 1/2025
Tax in Motion is a newsletter issued by PricewaterhouseCoopers Taxation Services Sdn Bhd.Whilst every care has been taken in compiling this newsletter, we make no representations orwarranty (expressed or implied) about the accuracy, suitability, reliability or completeness of theinformation for any purpose. PricewaterhouseCoopers Taxation Services Sdn Bhd, its employeesand agents accept no liability, and disclaim all responsibility, for the consequences of anyoneacting, or refraining to act, in reliance on the information contained in this publication or for anydecision based on it. Recipients should not act upon it without seeking specific professionaladvice tailored to your circumstances, requirements or needs.
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