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:

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

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:

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

🎯 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

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