Under the single-tier system, dividends paid by Malaysian companies were generally not taxed in the hands of shareholders. That changed for individuals from the year of assessment 2025. HASiL's explanatory notes for Form BE describe the tax, known as Dividend Tax, as imposed on individuals for dividend income exceeding RM100,000 at a rate of 2% on taxable income related to dividend income.
Who it applies to
According to HASiL's notes, the tax covers dividend income received by individual shareholders, both resident and non-resident, from listed and unlisted shares in Malaysia, including shares held through nominees. The taxable dividend income is determined under rules gazetted as P.U. (A) 148/2025 on 7 May 2025, which deal with individuals who have other income as well as dividends. The result therefore depends on each individual's overall income position rather than on the dividend figure alone.
Dividend vouchers
HASiL's dividend voucher page states that, starting from the year of assessment 2025, a company paying, crediting or distributing a dividend derived from Malaysia is required to furnish individual shareholders with a certificate or dividend voucher stating the gross amount of the dividend and the amount paid or credited. HASiL's prescribed voucher format notes that an individual whose total gross dividend, other than dividend which is exempt in the hands of the shareholder, exceeds RM100,000 must declare the dividend income as part of aggregate income. Because exempt dividends are treated differently, the voucher's description of each dividend matters.
For owner-managed companies, the charge may be relevant when reviewing how directors are remunerated. Our article on how budget measures become law explains why the gazetted rules, rather than the announcement, set the position.
This article is general information only. Requirements depend on each individual's circumstances; please refer to HASiL's official guidance, and see Saifudin & Co's tax advisory and compliance services if you would like assistance.