Executive Summary
This guide explains the new 2% tax on dividend income for individual investors in Malaysia, which was introduced in the 2025 Budget. We cover who is affected, how the tax is calculated, and what you need to do to ensure you are compliant.
What is the New Dividend Tax?
Effective from the year of assessment 2025, a new 2% tax will be imposed on dividend income received by resident and non-resident individuals from companies listed on Bursa Malaysia. This tax applies to individuals whose annual dividend income exceeds RM100,000.
Who is Affected?
The new dividend tax affects individual investors who receive more than RM100,000 in dividend income per year from companies listed on Bursa Malaysia. It does not apply to institutional investors or to dividends received from unlisted companies.
How is the Tax Calculated?
The tax is calculated at a flat rate of 2% on the gross amount of dividend income exceeding RM100,000. For example, if an individual receives RM150,000 in dividend income, the tax payable would be 2% of RM50,000, which is RM1,000.
What You Need to Do
The new dividend tax will be withheld by the dividend-paying company. This means that the tax will be deducted from your dividend payment before you receive it. You will need to report the gross dividend income and the tax withheld in your annual income tax return.
Related Services
Our Tax Advisory & Compliance team can provide you with personalized advice on how the new dividend tax will affect your investment portfolio. We can also assist you with the preparation of your annual income tax return.
Last updated: 15 Oct 2025