(TAX UPDATE) Dividend Not Tax-Free Anymore?

(TAX UPDATE) Dividend Not Tax-Free Anymore?

Introduction

“Boss, lucky we spoke earlier.”

That was what I told him after we finished the review.

He came to me with a simple plan.

  • Profitable year for his Sdn Bhd.

  • Cash available.

  • Take dividend.

Very straightforward.

But this time, we did something different.

We didn’t start with:

“How much to take?”

We started with:

“What happens after you take it?”

We looked at:

  • His total personal income

  • Timing and amount of dividend

  • Tax exposure under the new rules

Including the 2% dividend threshold.

At first, he didn’t see the issue.

“Just take now lah… same like before.”

But when we ran through the numbers, slowly it became clear.

If he followed his original plan :

He would cross multiple thresholds of RM100,000 in dividend income

Not just the 2%.

But also push part of his income into a higher bracket.

That was the turning point.

We adjusted only two things:

  • Timing

  • Amount

Nothing aggressive. Nothing complicated.

Just proper sequencing.

End result:

  • Lower overall tax exposure

  • Better cash position

He looked at me and said:

“Same dividend… but different outcome.”

That sentence is important.

Because most SME owners focus on:

“How much money I take out”

Very few focus on:

“How much I take it out”

And that is where planning makes a difference.

Practical Insight

Dividend is no longer just a withdrawal decision.

It is a tax decision.

Especially now:

  • Small changes in rules

  • Small percentages

  • Small thresholds

They look harmless. But they affect:

  • Timing

  • Structure

  • Total tax payable

And once the decision is made and the year is closed

You can only explain and you cannot change.

Closing Line

In tax, outcome is not driven by amount alone.

It is driven by timing and structure.

Call to Action

If you are planning to take dividend this year

  • Don’t just decide the amount.

  • Review the position first.

Engagement

Before taking dividend, do you look at tax impact first… or only after?

Past Blog on 2% Dividend Tax

17 Oct 2024
2% Tax on Dividend Income Above RM100,000 (Introduction & Overview)
https://www.ktp.com.my/blog/2percent-tax-dividend-income-above-rm100k/17oct2024

18 Nov 2024
2% Dividend Tax Malaysia – Example & Computation
https://www.ktp.com.my/blog/2percent-tax-dividend-income-above-rm100k/18nov2024

9 May 2025
2% Dividend Tax Malaysia – How It Is Calculated for Individuals
https://www.ktp.com.my/blog/2-dividend-tax-malaysia/9may2025

7 Oct 2025
Investment Holding Company Tax Rate (Dividend Context & Structure)
https://www.ktp.com.my/blog/investment-holding-company-tax-rate/7oct2025

23 Dec 2025
Malaysia Word of the Year 2025 (Includes Commentary on Dividend Tax Shift)
https://www.ktp.com.my/blog/2025-malaysia-word-of-the-year/23dec2025

This article is provided for general information only and reflects the author’s personal professional view based on the facts described. It does not constitute tax, legal, or other professional advice and should not be relied upon as a substitute for advice tailored to your specific circumstances. Tax and stamp duty outcomes may vary depending on documentation, ownership, beneficial interest, and actual usage. Readers should consult their own tax adviser and/or legal counsel before taking any action or implementing any arrangement described in this article.

PS : Authored by Mr Koh Teck Peng, the group principal, in his personal LinkedIn post.

Visit Us

  • Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

#Thk

#KTP


taxKtp Ktp