In response to public concerns over rising living costs, the Malaysian Finance Ministry has confirmed that no new taxes will be introduced in the near future. The government’s current strategy is to enhance the existing tax framework and improve compliance. This move aims to balance the country’s revenue needs with the economic pressures faced by its citizens, following a query from Senator Datuk Seri S. Vell Paari in the Dewan Negara.
Government to Focus on Compliance and Existing Tax Measures
The Finance Ministry has made it clear that its immediate priority is not to create new taxes but to strengthen the current system. Officials are concentrating on improving tax collection efficiency and ensuring that businesses and individuals comply with existing regulations. This approach is seen as a more stable way to increase national revenue without placing additional financial strain on the public.
Part of this strategy includes the implementation of measures that were already announced in the 2025 Budget. The government is moving forward with the global minimum tax, which is set to take effect on January 1, 2025. This tax will apply to large multinational corporations that have a global annual revenue of at least 750 euros, aligning Malaysia with international tax standards.
Another key measure is a 2% tax on dividend income, which will begin from the 2025 assessment year. These initiatives are designed to be targeted, ensuring that revenue is generated from specific sectors without broadly impacting the general population.
Key Initiatives to Streamline Tax Collection
The government is also rolling out several significant initiatives aimed at modernizing the tax collection process and boosting compliance among businesses. These reforms are being implemented in phases to ensure a smooth transition for companies.
One of the most important changes is the gradual implementation of e-invoicing. This system is designed to digitize the invoicing process, making it easier for the tax authorities to monitor transactions and reduce tax evasion. Other key measures include:
- The e-invoicing mandate began in August 2023 for businesses with an annual turnover exceeding RM100 million.
- The self-assessment stamp duty system (STSDS) will be introduced in stages, depending on the type of legal agreements and instruments involved.
These technological upgrades are expected to create a more transparent and efficient tax environment, particularly for larger enterprises that contribute significantly to the nation’s tax revenue.
Upcoming Tax Reforms for 2025
While no entirely new taxes are on the agenda, the government has confirmed that several existing tax structures will be reviewed and reformed. These changes are scheduled to take effect in 2025 and are part of a broader plan to expand the country’s tax base in a sustainable manner.
The reforms are intended to make the tax system fairer and more efficient. The Ministry has emphasized that these adjustments will be carefully managed to avoid any negative impact on the cost of living for ordinary Malaysians.
| Tax Reform | Effective Date | Details |
| Review of Sales Tax | May 1, 2025 | A comprehensive review of the current sales tax structure. |
| Broadening of Service Tax | May 1, 2025 | The scope of the service tax will be expanded to include more services. |
| Overhaul of Sugar Tax | January 1, 2025 | The excise duty on sugary drinks will be reformed to address public health. |
Balancing Revenue Needs with Public Hardship
The decision to hold off on new taxes comes at a critical time, as many Malaysians are struggling with inflation and the rising cost of everyday goods and services. The Finance Ministry’s cautious approach reflects an understanding of the economic challenges facing the public.
The government has stated that any future tax considerations will depend heavily on the country’s economic health and revenue requirements. Before proposing any new measure, a thorough evaluation of its potential impact on citizens and economic growth will be conducted.
This focus on careful planning and implementation is aimed at building a progressive tax system that supports national development without disproportionately affecting low and middle-income households. The government’s main goal is to ensure that Malaysia’s tax structure remains fair, effective, and responsive to the needs of its people.
