📢 Major Malaysia Tax Update – E-Invoice Exemption Raised to RM1 Million & Tax Refund Allocation Doubled 📢

 

The Malaysian Government and IRBM have announced key measures to support SMEs and improve overall tax compliance readiness ahead of the 2026 e-invoicing rollout.

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1️⃣ E-Invoice Exemption Threshold Raised to RM1 Million

According to the updated IRBM e-Invoice Guideline (Version 4.6, 7 December 2025), businesses with annual turnover below RM1,000,000 are now exempt from mandatory e-invoice implementation.

Who Is Exempt:
• Businesses with annual turnover below RM1 million

Who Must Comply (Effective 1 January 2026):
• Businesses with turnover between RM1 million and RM5 million, following IRBM’s current phased implementation schedule.

This adjustment aims to reduce compliance pressure for micro and small enterprises while allowing more time for digital readiness.

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2️⃣ Tax Refund Allocation Increased From RM2 Billion to RM4 Billion

The Government has doubled the allocation for income tax refunds to RM4 billion, with the objective of accelerating the processing of outstanding refunds from late 2025 into 2026. This measure is expected to ease cash flow constraints for both businesses and individual taxpayers.

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Industry Insight: What Businesses Should Consider

Although the exemption offers short-term relief, industry observations indicate several important considerations:

• Supply Chain Requirements May Still Apply

Some medium and large companies may still require e-invoices from all suppliers—regardless of exemption status—due to internal procurement, audit, or compliance policies.

• Many Micro and Small Businesses Are Still Preparing Their Digital Infrastructure

Industry feedback suggests that a significant number of SMEs are not yet fully equipped for e-invoice adoption.

• The Exemption Threshold May Evolve in Future Policy Updates

The RM1 million threshold is not stated as permanent. Businesses with growth potential should prepare early to avoid future compliance risks.

Therefore, exempted enterprises are encouraged to evaluate operational risks, improve digital readiness, and consider voluntary e-invoice adoption where feasible. Early preparation enhances future compliance and strengthens documentation quality for tax audit purposes.

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What This Means for Your Business

✔ Reduced compliance burden for micro and small enterprises
✔ Improved liquidity through faster tax refund processing
✔ Need for proactive planning in 2025–2026 tax strategy, especially for those near or above the exemption threshold
✔ Strengthened importance of internal readiness for MyInvois processes and documentation controls

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Professional Advisory on Malaysia E-Invoicing & Tax Compliance

KS Chia & Associates (Chartered Accountants) supports Malaysian businesses with:
• E-Invoice implementation and MyInvois compliance
• Corporate tax advisory and refund management
• Audit, accounting, and SME compliance advisory
• Readiness assessment for 2026 adoption phases

📲 WhatsApp: +6011 2366 5233
Contact our professional team for a consultation.

⚠️ URGENT REMINDER: 10 Days Left! Form CP 204 Submission Due 30 November 2025

 

Attention all companies with a 31 December Year-End (YE 31 Dec)!

The deadline to submit your Form CP 204 (Estimate of Tax Payable) for the Year of Assessment (YA) 2026 is just around the corner: 30 November 2025.

Submitting on time is crucial to avoid late submission penalties from LHDN. This is also your first and best opportunity to prevent overpaying taxes and avoid long, frustrating tax refund delays next year.

How to Avoid the Tax Refund Trap:

1. Accurate Forecasting: Don’t just reuse last year’s numbers. Base your tax estimate on your actual 2025 performance and realistic 2026 projections. With e-invoicing, you have the real-time data to do this effectively.
2. Remember Your Revisions: This is just the first step. You can (and should!) revise your tax estimate in June, September, and November 2026 using Form CP204A if your business performance changes.
3. Final 2025 Revision: Don’t forget, you may also need to submit your final revision for YA 2025 (Form CP204A) this month. It’s your last chance to adjust your 2025 tax payments!

Getting your initial estimate right is the foundation of good tax planning and strong cash flow management.

Don’t wait until the last minute. If you need assistance preparing your Form CP 204 or want to ensure your tax estimate is as accurate as possible, contact us today. Let’s secure your financial peace of mind for 2026.

Contact us now for a consultation!

#CP204 #TaxDeadline #LHDN #MalaysiaTax #CorporateTax #YE31Dec #TaxMalaysia #SME #BusinessOwner #AccountingMalaysia #TaxConsultant

RMCD Service Tax Policy 7/2025: New SST Rules for Malaysian Construction Industry

 

Key Policy Change: Material Costs Can Now Be Excluded from SST

Attention construction industry professionals! The Royal Malaysian Customs Department has issued Service Tax Policy No. 7/2025, creating a significant opportunity to reduce your tax burden.

The major change: You can now completely exclude construction materials from your Service Tax calculations by using separate, itemized invoices for materials and services.

When invoices clearly separate materials from services:

• ✅ Service tax applies ONLY to construction work services
• ✅ NO service tax on construction materials/goods

However, with non-separated invoices:

• ⚠️ Service tax applies to the ENTIRE invoice value (including all materials)

E-Invoicing Timeline & Compliance Risk

This policy change coincides with Malaysia's mandatory e-invoicing implementation:

Annual Turnover
Implementation Date
RM100M+
Since August 2024
RM25M-RM100M
Since January 2025
RM5M-RM25M
Since July 2025
RM1M-RM5M
From January 2026
Below RM1M
From July 2026

Important compliance alert: RMCD now has unprecedented visibility into your material purchases through the e-invoicing system. This creates a digital audit trail that makes detecting artificial cost inflation straightforward.

High-Risk Practices to Avoid

1. Inflated Material Allocations: Material costs inconsistent with e-invoice records
2. Unusual Markup Patterns: Significantly higher markups on materials versus services
3. Incomplete Documentation: Inability to substantiate material/service separation
4. Inconsistent Treatment: Different approaches across similar projects

Action Steps for Tax Optimization

1. Update Invoicing Systems: Implement itemized billing templates that clearly separate materials from services
2. Establish Documentation Protocols: Create systems linking material e-invoices to specific projects
3. Develop Markup Policies: Document consistent, defensible markup methodologies
4. Review Subcontractor Agreements: Ensure subcontractors also separate materials from services
5. Conduct Internal Compliance Review: Assess readiness for the July 2025 implementation

Need help implementing these changes? Our construction industry tax specialists offer complimentary 30-minute consultations to ensure you maximize savings while staying compliant.

Policy No. 7/2025 offers legitimate tax savings for construction companies through proper invoicing. With e-invoicing now mandated, RMCD can easily verify material costs. Implement compliant documentation systems now to maximize benefits while avoiding audit risks.

#ServiceTaxMalaysia #ConstructionTax #RMCDPolicy #SST2025 #MalaysianTax #ConstructionIndustry #EInvoicing #SSTexemption #KualaLumpurConstruction #FinanceMalaysia #BusinessTips

Budget 2026 introduces both a new tax incentive and a key compliance milestone for Malaysian SMEs. Businesses with RM500,000-RM5 million turnover can now upgrade IT systems for e-Invoice compliance while claiming 100% capital allowances within 2 years instead of 3 years.

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💻 Accelerated Capital Allowance (ACA) for ICT Upgrades

To help SMEs digitalise and prepare for e-Invoice implementation, the Government has announced a special Accelerated Capital Allowance (ACA) for ICT assets.

✅ Eligible period: 11 October 2025 – 31 December 2026

✅ Applies to: ICT hardware, software, and digital infrastructure (local or imported)

✅ Claim 100% within 2 years (instead of 3 years)

• Year 1: Initial Allowance 20% + Annual Allowance 40% = 60%
• Year 2: Remaining 40%

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💡 Example: RM100,000 ICT Investment

Accelerated Capital Allowance (Budget 2026):

• Year 1 deduction: RM60,000 (20% IA + 40% AA)
• Year 2 deduction: RM40,000 (40% AA)
• Total write-off period: 2 YEARS ✓

💰 The Benefit: You can fully write off the cost within 2 years instead of 3, improving cash flow and accelerating tax relief timing. That's an additional RM20,000 deduction in Year 2 compared to normal rates!

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⚠️ Mandatory e-Invoice Implementation

Under IRBM's phased rollout schedule:

📅 1 January 2026 – Businesses with turnover RM1 million – RM5 million

📅 1 July 2026 – Businesses with turnover RM500,000 – RM1 million

📅 Below RM500,000 – Exempted (until further notice)

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Key Requirements:

• Suppliers must issue an e-Invoice upon each transaction
• Once validated by IRBM, buyers have 72 hours to accept, reject, or request cancellation
• e-Invoices are transmitted via the MyInvois Portal or API integration
• Non-compliance may lead to penalties or disruption in invoicing

🤝 Good News: All businesses get a 6-month grace period from their respective implementation dates to ensure smooth transition.

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✅ Action Plan for SMEs

1️⃣ Maximise the ACA Benefit

• Plan ICT system upgrades before 31 Dec 2026
• Replace outdated computers, software, and servers
• Enjoy faster capital allowance claims

2️⃣ Prepare for e-Invoice

• Check your turnover category and applicable deadline
• Upgrade to an e-Invoice-ready accounting system
• Train staff and test your e-Invoice workflow early

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💬 Need Help Planning Your ACA Claim or e-Invoice Readiness?

Our tax advisory team can help you develop a customized strategy.

📱 WhatsApp: +60 11-2366 5233 🌐 www.kschia.com.my

Schedule a complimentary consultation today!

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About KS Chia & Associates (AF 001828) "20 Years of Excellence"

📞 Office: 03-6258 3692 📱 WhatsApp: +60 11-2366 5233 📧 Email: info@kschia.com.my 🌐 Website: www.kschia.com.my

Licensed Audit & Tax Firm • Kuala Lumpur

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#Budget2026 #eInvoice #ACA #SMEMalaysia #TaxUpdate #Digitalisation  #KSChiaAssociates

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🚀 Budget 2026: e-Invoice Compliance Meets ACA Benefit for SMEs

📅 Published: 14 October 2025 | 📝 KS Chia & Associates | ⏱️ 3 min read

Budget 2026 introduces both a new tax incentive and a key compliance milestone for Malaysian SMEs. Businesses with RM500,000-RM5 million turnover can now upgrade IT systems for e-Invoice compliance while claiming 100% capital allowances within 2 years instead of 3 years.

💻 Accelerated Capital Allowance (ACA) for ICT Upgrades

To help SMEs digitalise and prepare for e-Invoice implementation, the Government has announced a special Accelerated Capital Allowance (ACA) for ICT assets.

✅ Eligible period: 11 October 2025 – 31 December 2026

✅ Applies to: ICT hardware, software, and digital infrastructure (local or imported)

✅ Claim 100% within 2 years (instead of 3 years)

• Year 1: Initial Allowance 20% + Annual Allowance 40%
• Year 2: Remaining 40%

💡 Example: RM100,000 ICT Investment

Accelerated Capital Allowance (Budget 2026)

Year 1 deduction: RM60,000 (20% IA + 40% AA)

Year 2 deduction: RM40,000 (40% AA)

Total write-off period: 2 YEARS ✓

💰 The Benefit: You can fully write off the cost within 2 years instead of 3, improving cash flow and accelerating tax relief timing. That's an additional RM20,000 deduction in Year 2 compared to normal rates!

⚠️ Mandatory e-Invoice Implementation

Under IRBM's phased rollout schedule:

Implementation Date	Annual Turnover
1 Jan 2026	RM1 million – RM5 million
1 Jul 2026	RM500,000 – RM1 million
Exempted	Below RM500,000 (until further notice)

Key Requirements:

• Suppliers must issue an e-Invoice upon each transaction
• Once validated by IRBM, buyers have 72 hours to accept, reject, or request cancellation
• e-Invoices are transmitted via the MyInvois Portal or API integration
• Non-compliance may lead to penalties or disruption in invoicing

🤝 Good News: All businesses get a 6-month grace period from their respective implementation dates to ensure smooth transition.

✅ Action Plan for SMEs

1️⃣ Maximise the ACA Benefit

• Plan ICT system upgrades before 31 Dec 2026
• Replace outdated computers, software, and servers
• Enjoy faster capital allowance claims

2️⃣ Prepare for e-Invoice

• Check your turnover category and applicable deadline
• Upgrade to an e-Invoice-ready accounting system
• Train staff and test your e-Invoice workflow early

💬 Need Help Planning Your ACA Claim or e-Invoice Readiness?

Our tax advisory team can help you develop a customized strategy

📱 WhatsApp: +60 11-2366 5233

Schedule a complimentary consultation

KS Chia & Associates (AF 001828)

"20 Years of Excellence"

📞 Office: 03-6258 3692
📱 WhatsApp: +60 11-2366 5233
📧 Email: info@kschia.com.my
🌐 Website: www.kschia.com.my

Budget2026 eInvoice ACA SMEMalaysia TaxUpdate Digitalisation TaxPlanning

Budget 2026 Malaysia: Essential Tax Changes You Need to Know

 

By: KS Chia & Associates - Licensed Tax Agents, Kuala Lumpur

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⚡ Quick Summary (TL;DR)

Budget 2026 announced 40 tax measures on 10/10/25. Three require immediate action:

1. LLP Partners: NEW 2% tax on distributions >RM100k (Act by 31/12/25 for tax-free window)
2. Businesses: Capital allowance 100% in 2 years - BUT local manufacturers ONLY
3. Individuals: Multiple reliefs expanded (childcare RM2k→RM3k, learning disabilities, CCTV)

👇 Skip to your section: LLP Partners | Business Owners | Working Families

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🚨 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 👇

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⚠️ 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:

1. Is supplier the actual manufacturer or just distributor?
2. Where is machinery manufactured? (Malaysia vs imported)
3. Get manufacturer's SSM registration
4. Obtain written manufacturer declaration
5. 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 👇

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👨‍👩‍👧 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

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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

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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)

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4. CCTV & Home Safety: RM2,500 Relief ✅

New Items:

• CCTV systems for home
• Food waste grinders

Claim: Once within 2 years (YA2026-2027 only)

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5. Tourist Attractions: RM1,000 Relief ✅

New for YA2026:

• Entrance fees to museums, theme parks, zoos
• Cultural and art programmes

Tax Saving: ~RM240

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🤖 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

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🏢 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

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✅ Your Action Plan

For LLP Partners (URGENT - By 31/12/25)

1. Calculate YA2026 distribution exposure
2. Review cash flow for YA2025 accelerated distributions
3. Assess partnership agreement flexibility

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For Businesses (Before Machinery Purchase)

1. Verify manufacturer location (Malaysia vs imported)
2. Request SSM registration & manufacturing license
3. Get written manufacturer declaration
4. Calculate: local premium vs tax benefit
5. Time purchases within deadline (by 31/12/26)

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For Individuals & Families 

1. Review childcare expenses & documentation
2. Assess learning disability treatment costs
3. Consider CCTV/food waste grinder purchase (YA2026)
4. Plan domestic tourism with entrance fees
5. Review life insurance for children

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For MSMEs (Planning AI Training)

1. Identify AI training needs
2. Verify provider recognition (MyMahir/NAICI)
3. Budget for YA2026 or YA2027
4. Submit application to TalentCorp
5. Document expenses properly

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🚫 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.

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💼 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

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📞 Contact Us 

KS Chia & Associates
Licensed Audit & Tax Firm • Kuala Lumpur

Get Your Free Assessment:

• WhatsApp: +60 11-2366 5233 (fastest response)
• Phone: 03-6258 3692
• Email: info@kschia.com.my
• Website: www.kschia.com.my

Office Hours: Mon-Fri 8.30am-5.30pm

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🎯 Key Takeaways

1. LLP partners: Act by 31/12/25 for last tax-free window
2. Businesses: Verify local manufacturer status BEFORE buying machinery
3. Individuals: Multiple reliefs expanded - maximize your claims
4. MSMEs: AI training offers 50% extra deduction
5. Stay alert: Finance Bill Part 2 coming with more details

Don't wait until December. Strategic planning today saves thousands tomorrow.

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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