SHAH ALAM - The Malaysian government is set to expand its tax base with the introduction of a 2 per cent dividend tax on individual shareholders earning more than RM100,000 in dividend income, beginning from the 2025 assessment year.
This move aims to create a more equitable tax system by ensuring that the burden of income tax is shared between both salaried employees and high-net-worth shareholders.
During the presentation of the 2025 Madani Malaysia Budget in the Dewan Rakyat on Friday, Prime Minister Datuk Seri Anwar Ibrahim highlighted that this measure seeks to reduce the government's dependency on income tax contributions from wage earners alone.
"This initiative aims to broaden the scope of income tax collection beyond just salaried individuals.
"It seeks to include contributions from company owners and individuals with substantial shareholdings worth millions of ringgit,” he said.
To balance this initiative, the government will consider exemptions for dividend income derived from government savings schemes.
"Consideration will be given to exempt dividend income from government savings such as the Employees Provident Fund (EPF), trust funds under Permodalan Nasional Berhad (PNB) and foreign dividend income,” Anwar said.