Relevant to those sitting TX-MYS in December 2025 or March, June or September 2026

Introduction

This is the second of two articles, provided by the TX-MYS examining team to update candidates on the legislation and related resources pertaining to taxation in Malaysia, covering areas in direct and indirect taxes which are included in the TX-MYS syllabus. 

These articles should be read by candidates who are preparing for the TX-MYS exam in the period from 1 December 2025 to 30 September 2026.

Part 1 provides an overview of the main features of the Malaysian tax system included in the TX-MYS syllabus as at 31 March 2025. 

This Part 2 considers the changes brought about by:

• Finance Act 2024, Act 862, gazetted on 31 December 2024
• Measures for the Collection, Administration and Enforcement of Tax Act 2024, Act 863, gazetted on 31 December 2024, and
• Several gazette orders.

It should be noted that the subject matter of tax on gains or profits from the disposal of capital assets (capital gains), which was introduced in Act 851 but amended by the Income Tax (Amendment) Act 2024, continues to be specifically excluded from the TX-MYS syllabus for the exam year of December 2025 to September 2026, as at the cut-off date 31 March 2025, the subject matter remained fluid and continues to evolve. Given the exclusion, capital gains will not be discussed in detail beyond a cursory mention in these two articles.

Any reference to a section or schedule in this article refers to a provision of the Income Tax Act 1967 (as amended), unless otherwise specified.

The abbreviations used in this article are:

• CA – Capital Allowance
• CI – Chargeable Income
• DGIR – Director General of Inland Revenue
• EoT – Estimate of tax
• EPF – Employees’ Provident Fund
• FSI – Foreign-Sourced Income 
• IHC – Investment Holding Company
• IRB – Inland Revenue Board
• LLP – Limited Liability Partnership
• MoF – Minister of Finance
• NR – Non-resident
• RPGT – Real Property Gains Tax
• SAS – Self-assessment system
• SSPN – National Education Savings Scheme
• w.e.f. – with effect from
• YA – Year of Assessment

Finance Act 2024 (Act 862) and Measures for the Collection, Administration and Enforcement of Tax Act 2024 (Act 863)

A. Overview
This Part presents an overview of the measures brought about by Budget 2025 as legislated in the Acts 862 and 863. It refers only to the subject matter included in the TX-MYS syllabus and detailed study guide. Where deemed necessary, further discussion is followed-up in Part B.

B. Amendments in detail
Discussed below in further details are some of the budget measures that directly relate to the areas of focus in the TX-MYS syllabus. 

1. Exemption of FSI
PU(A) 234 of 2022 granted an exemption to resident individuals in respect of income arising from outside Malaysia and received in Malaysia, as seen below: 

“3. (1) The Minister exempts a qualifying individual from the payment of income tax in respect of the gross income from all sources of income under section 4 of the Act, excluding a source of income from a partnership business in Malaysia, which is received in Malaysia from outside Malaysia in the basis period for a year of assessment.

The exemption period was from 1 January 2022 to 31 December 2026.

PU(A) 451 of 2024 extended the exemption by ten years, from 31 December 2026 to 31 December 2036.

The conditions stipulated for the exemption remain as before.

2. RPGT

(a) Carry forward of allowable loss
Up to 31 December 2024, an allowable loss in respect of a disposal may be allowed as a deduction to reduce the total chargeable gain of a person for a YA in which the disposal was made. 

W.e.f. 1 January 2025, section 7(4) (a) is amended so that an allowable loss may only be absorbed by a subsequent profitable transaction. The provision now reads as follows:

“7(4)  Where -

(a) There is an allowable loss in respect of a disposal, such allowable loss shall be allowed as a deduction to reduce the chargeable gain of a person in the subsequent disposal of a chargeable asset in the same YA in which the disposal was made;” 

This means that the loss may no longer be carried back: it can only be carried forward in the same YA.

If the loss is not absorbed in that YA, the unabsorbed amount may be carried forward, as before, and be absorbed in the first subsequent YA for which there is a chargeable gain, until fully absorbed.

Illustration 1

Facts
Prop Sdn Bhd (PSB) made the following disposals:

Calculation of RPGT

(b) SAS for RPGT
W.e.f. 1 January 2025, disposals subject to RPGT come under the SAS. Act 863 introduced the various SAS provisions in the RPGT Act 1976 to facilitate the operation of SAS.

(c) Due date for payment of RPGT
Under the SAS, the RPGT under the deemed assessment upon the electronic furnishing of the RPGT return is due and payable within the period of 90 days from the date of disposal [section 21(4) of RPGT Act 1976].

Note however, the duty of the acquirer to retain and pay part of the consideration [under section 21B, RPGT Act 1976] to the DGIR remains unchanged: the acquirer is required to pay over the tax deducted to the DGIR within 60 days after the date of disposal.

Written by a member of the TX-MYS examining team