KUALA LUMPUR, Dec 1 — The Dewan Rakyat has passed the Finance Bill 2025, which details amendments to five tax acts, including the Income Tax Act 1967, the Real Property Gains Tax Act 1976, the Stamp Act 1949, the Labuan Business Activity Tax Act 1990, and the Petroleum (Income Tax) Act 1967.
Deputy Finance Minister Lim Hui Ying said the imposition of tax on the distribution of profit income from limited liability partnerships (LLPs) received by partners, effective from the Year of Assessment (YA) 2026, aims to equalise tax treatment between individual partners and individual shareholders, in line with the implementation of the two per cent dividend tax beginning YA 2025.
“The imposition of tax on profit distributions received by LLP partners is part of efforts to continuously improve the individual income tax structure so that it becomes more progressive.
“In addition, the two per cent rate is a minimum rate, and the government is of the view that this rate, together with the RM100,000 threshold value, is not expected to place an additional burden on partners,” she said when winding up the debate on the Bill.
Lim added that the government also takes note of suggestions to prepare a comprehensive impact assessment report and to reassess the two per cent rate so that it does not affect the growth of the high-value services industry.
Commenting on the issue of “double taxation” raised by several MPs, namely the MPs for Pendang and Padang Rengas, she said the problem does not arise because an LLP, as a business entity, only pays one type of tax, which is income tax at the corporate rate, while the two per cent tax is paid by individuals who are partners.
Meanwhile, in response to the issue of stamp duty and the implementation of the self-assessment stamp duty system raised by several MPs, Lim said the approach is not new and is in line with international practice.
“This self-assessment system involves the use of electronic means in tax calculation and document submission. It facilitates business processes and improves the country’s position in the World Bank's assessment under the Business Ready initiative.
“The self-assessment system is not an additional burden for taxpayers. It has been introduced since 2001 for corporate taxpayers and extended to individuals in 2003.
"This reform has successfully increased tax compliance and had a positive impact on national revenue collection,” she said.
The Bill was debated by eight MPs: Kampar, Pendang, Gerik, Bachok, Beruas, Tanjong Karang, Rantau Panjang, and Padang Rengas.
The Dewan Rakyat also passed the Measures for the Collection, Administration, and Enforcement of Tax Bill 2025 at its third reading.
Lim noted that the Bill consists of administrative amendments aimed at regulating tax collection and enforcement more effectively, as well as strengthening the tax administration's digitalisation agenda.
The amendments to the Bill aim to expand the use of digital platforms for tax filing, document processing, and refund verification, in line with the national digitalisation policy.
The Measures for the Collection, Administration, and Enforcement of Tax Bill 2025 was debated by six MPs: Kota Melaka, Pendang, Gerik, Kampar, Dungun, and Temerloh.
