The introduction of the 2% dividend tax in Malaysia, effective from the Year of Assessment (YA) 2025, necessitates a revision of the traditional dividend voucher format. This new tax is a self-assessment tax for individual shareholders, meaning the company’s role is to provide accurate documentation so the shareholder can properly file their taxes.
Key Changes to the Dividend Tax System
This tax is a significant shift from Malaysia’s single-tier tax system. Previously, dividends were exempt from tax at the individual shareholder level, as the company had already paid corporate tax on the profits. With the new 2% tax, dividends are now subject to an additional tax at the individual level, but only for the portion of annual dividend income that exceeds RM100,000/-. The tax is levied on the individual, not the company.
Revisions for the Dividend Voucher
To comply with the new requirements, companies must ensure their dividend vouchers contain specific details that allow shareholders to accurately calculate their tax liability. The Inland Revenue Board (LHDNM) has issued an updated format for this purpose.
A revised dividend voucher must clearly state the following:
Gross Dividend Amount: The total amount of the dividend declared before any payments are made.
Net Dividend Paid or Credited: The final amount the shareholder receives.
Date of Payment: The date the dividend was distributed.
Nature of Dividend (if applicable): If the dividend is paid in a non-monetary form, such as property, the voucher must specify the market value of the asset at the time of distribution.
This information is crucial because a shareholder may receive dividends from multiple companies. They need the detailed voucher from each company to aggregate their total annual dividend income and determine if they have crossed the RM100,000/- threshold.
Insights for Companies
While companies are not responsible for collecting or remitting the 2% tax, they have a critical role in facilitating compliance for their shareholders.
- Dividend Voucher Updates: Companies need to update dividend voucher format to ensure all required fields are included.
- Communication with Shareholders: It is advisable for companies to communicate proactively with their shareholders about this change. Explaining the new tax and its implications, as well as the purpose of the revised voucher, can help prevent confusion.
- No Withholding Required: It’s important to remember that companies do not withhold this 2% tax from the dividend payment. The full net dividend amount is paid to the shareholder, and the tax is a self-assessed liability for the individual when they file their personal income tax return.
The revised dividend voucher is the primary tool for a company to support its shareholders in complying with this new tax regulation.
Connect with Us
If you have any questions or require assistance, reach out to us or you can consult your tax agent or connect with the Malaysian Inland Revenue Board (LHDNM) through 603-8911 1000 or visit their website for more information, https://www.hasil.gov.my.
Disclaimer
The information provided herein is for general information purposes. While we strive to ensure the accuracy of the information, we make no warranties or representations about the completeness, accuracy and usefulness of this information. We assume no responsibility or liability for any errors or omissions in the content of this document. You are advised to refer to the website link(s) provided, where applicable or the regulatory body mentioned herein and/or contact us directly, contact@datamet.com.my.