By: KS Chia & Associates - Licensed Tax Agents, Kuala Lumpur
⚡ Quick Summary (TL;DR)
Budget 2026 announced 40 tax measures on 10/10/25. Three require immediate action:
- LLP Partners: NEW 2% tax on distributions >RM100k (Act by 31/12/25 for tax-free window)
- Businesses: Capital allowance 100% in 2 years - BUT local manufacturers ONLY
- Individuals: Multiple reliefs expanded (childcare RM2k→RM3k, learning disabilities, CCTV)
👇 Skip to your section: LLP Partners | Business Owners | Working Families
🚨 URGENT: New LLP Tax (Deadline: 31/12/25)
What's Changing
LLP profit distributions were 100% tax-exempt. From YA 2026: distributions >RM100k taxed at 2%.
Critical Deadline
31 December 2025 = Last day for 100% tax-free distributions (YA 2025)
⚠️ Don't Convert to Sdn Bhd!
Common mistake: "I'll convert my LLP to Sdn Bhd to avoid the tax"
Reality: Sdn Bhd dividends ALSO taxed at 2% (from YA 2025 - already in effect!)
What to Do NOW
✅ Calculate your YA 2026 distribution exposure
✅ Consider accelerating profits to YA 2025 (if cash flow permits)
✅ Review optimal distribution amounts per partner
Need help? Free assessment available 👇
⚠️ Capital Allowance: The Local Manufacturer Trap
The Good News
Claim 100% capital allowance in 2 years (was 3-10 years):
- Year 1: 20% + 40% = 60%
- Year 2: 40%
- Total: 100% in 2 years
The Catch (CRITICAL!)
Only for machinery from LOCAL manufacturers!
Who Qualifies vs Who Doesn't
Real Impact: RM100k Machinery
Local Manufacturer (2 years):
- Year 1: Claim RM60,000
- Year 2: Claim RM40,000
- Tax saving @ 24%: RM14,400 (Year 1)
Imported (7 years):
- Year 1: Claim RM34,000
- Years 2-7: Spread over 6 more years
- Tax saving @ 24%: RM8,160 (Year 1)
Difference: RM6,240 cash flow advantage in Year 1 for local machinery!
Before You Buy: Verification Checklist
Most Malaysian SMEs import specialized machinery. Don't assume you qualify!
Verify:
- Is supplier the actual manufacturer or just distributor?
- Where is machinery manufactured? (Malaysia vs imported)
- Get manufacturer's SSM registration
- Obtain written manufacturer declaration
- Document for LHDN audit
Purchase Deadline: 11/10/25 to 31/12/26 (only 14.5 months)
Our Service: We'll verify your supplier's qualification before you commit. Contact us 👇
👨👩👧 Individual Tax Reliefs - What's Expanded
1. Childcare Relief: RM2,000 → RM3,000 ✅
What Changed:
- Increased to RM3,000 (permanent)
- Age limit: Up to 12 years (was 6)
- Includes after-school transit centers
Tax Saving: ~RM240-260 per year
2. Learning Disabilities: RM6,000 → RM10,000 ✅
Covered:
- Assessment, diagnosis, early intervention
- Rehabilitation for autism, ADHD, GDD, Down syndrome
- Children aged 18 and below
Tax Saving: ~RM2,400 at 24% rate
3. Life Insurance: Now Includes Children ✅
Previous: RM3,000 for self & spouse only
New: RM3,000 now includes children's life insurance
Child Eligibility:
- Below 18 and unmarried, OR
- 18+ unmarried pursuing tertiary education, OR
- Disabled children (no age limit)
4. CCTV & Home Safety: RM2,500 Relief ✅
New Items:
Claim: Once within 2 years (YA2026-2027 only)
5. Tourist Attractions: RM1,000 Relief ✅
New for YA2026:
Tax Saving: ~RM240
🤖 AI Training Incentive for MSMEs
Who: MSMEs (including HRDF contributors)
Benefit: Extra 50% tax deduction on AI training
Frequency: Once every 2 years
Period: YA2026-2027
Example:
- Spend RM20,000 on AI training
- Total deduction: RM30,000 (RM20k + RM10k extra)
- Tax saving @ 24%: RM7,200
- Effective cost: RM12,800
Requirements: Training must be recognized by MyMahir/NAICI
🏢 Other Key Business Measures
Foreign Income: Extended Exemption
- Dividends & capital gains from overseas
- Extended 4 years (2027-2030)
Bursa Listing: Expanded Eligibility
- Now includes energy & utilities MSMEs
- RM1.5 million deduction on listing costs
- YA2026-2030
Stamp Duty Changes
- Non-citizens: 4% → 8% (residential property)
- First home: Exemption extended to 2027 (up to RM500k)
- Employment contracts: Threshold RM300 → RM3,000
✅ Your Action Plan
For LLP Partners (URGENT - By 31/12/25)
- Calculate YA2026 distribution exposure
- Review cash flow for YA2025 accelerated distributions
- Assess partnership agreement flexibility
For Businesses (Before Machinery Purchase)
- Verify manufacturer location (Malaysia vs imported)
- Request SSM registration & manufacturing license
- Get written manufacturer declaration
- Calculate: local premium vs tax benefit
- Time purchases within deadline (by 31/12/26)
For Individuals & Families
- Review childcare expenses & documentation
- Assess learning disability treatment costs
- Consider CCTV/food waste grinder purchase (YA2026)
- Plan domestic tourism with entrance fees
- Review life insurance for children
For MSMEs (Planning AI Training)
- Identify AI training needs
- Verify provider recognition (MyMahir/NAICI)
- Budget for YA2026 or YA2027
- Submit application to TalentCorp
- Document expenses properly
🚫 Common Mistakes to Avoid
❌ Mistake 1: Converting LLP to Sdn Bhd
Why wrong: Both have 2% tax. LLP actually better (RM100k threshold).
❌ Mistake 2: Assuming All Machinery Qualifies
Why wrong: Only Malaysian-made qualifies. Most machinery is imported.
❌ Mistake 3: Waiting Until December
Why wrong: LLP deadline 31/12/25. Capital allowance deadline 31/12/26. Plan now!
❌ Mistake 4: Incorrect AI Training Calculation
Why wrong: It's EXTRA 50% (not 150% total). Verify training recognition.
❌ Mistake 5: Thinking Budget = Final Law
Why wrong: Finance Bill Part 2 coming. May have changes or additions.
💼 Need Professional Guidance?
Budget 2026's 40 measures require expert navigation. We're offering:
🎁 FREE Budget 2026 Impact Assessment (30 minutes)
We'll analyze:
✅ Which measures affect your specific situation
✅ Exact RM tax impact calculations
✅ Strategic planning recommendations
✅ Action timeline with deadlines
Our Services:
- LLP distribution optimization
- Capital allowance verification
- Individual tax relief maximization
- Business incentive applications
- Year-end tax planning
📞 Contact Us
KS Chia & Associates
Licensed Audit & Tax Firm • Kuala Lumpur
Get Your Free Assessment:
Office Hours: Mon-Fri 8.30am-5.30pm
🎯 Key Takeaways
- LLP partners: Act by 31/12/25 for last tax-free window
- Businesses: Verify local manufacturer status BEFORE buying machinery
- Individuals: Multiple reliefs expanded - maximize your claims
- MSMEs: AI training offers 50% extra deduction
- Stay alert: Finance Bill Part 2 coming with more details
Don't wait until December. Strategic planning today saves thousands tomorrow.
About KS Chia & Associates
Licensed audit and tax firm serving Malaysian businesses since 1995. We specialize in tax planning, audit, and business advisory for SMEs.
Credentials: Licensed by MOF | Approved LHDN tax agents | 30-person professional team | 500+ clients nationwide
#Budget2026 #MalaysiaTax #TaxPlanning #LLPTax #CapitalAllowance #KualaLumpur #SMEMalaysia #TaxRelief #YA2026
Action Steps for Tax Optimization
