Malaysia Introduces New Regulations on Individual Income Tax on Dividend
Starting from the Year of Assessment (“YA”) 2025, Malaysia will begin taxing dividend income exceeding RM100,000 received by individual taxpayers at 2%.
Previously, under Malaysia’s single-tier tax system which came to effect on YA2008, dividends distributed to shareholders were not subject to additional tax at the individual level. In other words, once a company paid tax on its profits, the dividends distributed from those profits were not taxed again in the hands of shareholders.
However, amendment of Finance Act 2024, individual taxpayers are now required to report dividend income as part of their personal income tax filings in YA2025, if the threshold of RM100,000 have been met. This calls for a shift which requires a better documentation, particularly a dividend voucher that include all necessary income and tax details.
To support this change, the Inland Revenue Board of Malaysia (“IRBM”) has introduced a new format for dividend vouchers, which companies must follow when paying out dividends.
This update aims to help individuals declare their dividend income correctly in their tax returns. The revised format and sample voucher, which were amended on 13 June 2025 and was officially announced by IRBM on 24 June 2025, will apply to all dividend payments made on or after 1 January 2025.
To facilitate this, companies are now required to issue dividend vouchers that follow the new format prescribed by the IRBM. These vouchers will enable taxpayers to report the dividend income accurately and allow the IRBM to verify any tax deducted at source.
This article explains the key updates in simple terms, explains the implications for companies and individual shareholders, and outlines the actions needed to stay compliant.
-
Dividend Voucher
The IRBM has released an updated format along with a sample of the dividend voucher, which is available for viewing at:
-
Companies
From 1 January 2025 onwards, all companies must adopt the revised format when issuing dividend vouchers. This is a mandatory requirement for every dividend distribution made.
In addition to issuing the vouchers, companies are also required to disclose new information in the company’s income tax return (Form C) starting from the YA2025. Under the “Particulars of Company” section of the return form, the following items must be completed:
|
Item
|
Subject
|
Explanation
|
|
G7a
|
The company makes dividend payments
to individual shareholders in the basis period.
|
If the company made dividend
payments to individual shareholders during the basis period, fill in YES and
proceed to complete G7b and G7c.
If no such payments were made, fill
in NO.
|
|
G7b
|
The company issues dividend
certificates/vouchers to individual shareholders
|
Complete this item only if G7a
is YES.
Fill in YES if the company
issued dividend certificates/vouchers to individual shareholders, or NO if it
did not.
|
|
G7c
|
The number of individual
shareholders who received dividends exceeding RM100,000.
|
Complete this item only if G7a
is YES.
Fill in the total number of
individual shareholders who received dividends exceeding RM100,000 during the
basis period.
|
It is crucial that companies report this information accurately in their tax return, as failure to do so may result in penalties for submitting inaccurate, false or misleading information.
-
Individuals
For individual shareholders, they are required to include the dividend income in their personal income tax return starting YA2025 should they receive any dividend payments exceeding RM100,000.
Taxpayers should cross check with company, whether Dividend Vouchers contains all the necessary information required to declare their dividend income. The dividend vouchers are important and must be kept for a minimum of seven (7) years, in case of future audit or verification by the IRBM.
For further information, please visit the official website of the Inland Revenue Board of Malaysia at
https://www.hasil.gov.my/en.
KAIZEN Group, together with its associate firms in Malaysia, can help the clients to perform these compliances formalities so as to maintain the Malaysia company in good standing. Please call and talk to our professional accountants in Kaizen for further clarification.
Home
Knowledge
KNOWLEDGE
