(TAX UPDATE) REIT Investors: The 10% Tax You Trusted Is Gone

(TAX UPDATE) REIT Investors: The 10% Tax You Trusted Is Gone

Introduction

“Boss, quick one… this REIT income still same like before right? Just dividend only.”

The call came in while I was between meetings.

Very casual tone. Very confident.

The kind of question people ask when they are already sure of the answer.

I did not reply immediately.

Because experience has taught me something.

When a client says “seperti biasa”… It usually means something is no longer the same.

I told him I would call him back.

Later, I called him.

Hewent through his investment portfolio over the phone.

A few counters. Mostly REIT units. Held for years.

He likes REIT. And honestly, for many years, he was right.

The Real Incident

At the same time, I whatsapp him the latest update from LHDN …Practice Note 2/2026.

Another document.
Another update.

But this one is different.

Because it comes after the end of the special tax treatment that many investors have been relying on.

While on the call, I started explaining.

There was a short silence.

Then he asked:

“Wait… this one change already?”

He pulled out the old Public Ruling 1/2021.

We compared.

Line by line. And that was when the reality became clear.

Nothing changed in the investment. But the tax outcome has changed.

Same REIT income.
Different tax treatment.
Different tax rate.

Starting YA2026 onwards.

The Turning Point

Then he said something that I have heard many times over the years.

“So… all these years I thought this one fixed already.”

I did not correct him immediately.

Because this is not about right or wrong.

This is about how most business owners think.

If something has been working for years, it becomes an assumption.

And assumptions are very dangerous in tax.

What Actually Changed (Explained Simply)

I explained it to him in plain terms.

Before YA2026, many REIT investors enjoyed a simple system.

A final withholding tax of 10 percent.

No need to think.
No need to plan.
No need to declare further.

It felt “settled”.

From YA2026 onwards, that simplicity is gone.

Now, tax treatment depends on who you are.

If you are a Malaysian tax resident individual:

Your REIT income is no longer final taxed.

It will be added to your total income.

It will follow your personal tax bracket.

No withholding tax at source.

You must declare it yourself.

If you are a non-resident individual:

You are taxed at 30 percent.

No withholding mechanism.

If you are a non-resident company:

24 percent withholding tax. Final.

He listened quietly.

Because the implication is slowly sinking in.

Where Most People Will Get Caught

I told him this very clearly.

The biggest issue is not the tax rate.

It is the change in behaviour.

Previously:

“Tax already deducted. No need to touch.”

Now:

You must track.
You must report.
You must get it right.

And this is where I see most people getting caught. Not because they are careless.

But because they are still operating based on old understanding,

And this is where exposure starts.

Practical Insight

Tax risk today is no longer about not knowing the law.

Most people know something.

The real risk is holding on to outdated understanding.

REIT investors are a very good example.

They are not aggressive.

They are not trying to avoid tax.

They are simply following what used to work.

But tax does not reward consistency.

It rewards awareness.

Reflection

I have seen this pattern too many times.

Each time, the story is similar.

Nothing dramatic happens on day one.

No alarm. No warning.

But slowly …

Assumptions build up.
Positions become outdated.
Exposure accumulates.

Until one day, it becomes a problem that needs to be explained.

Closing Line

In tax, the real danger is not making a mistake.

It is continuing with confidence when the rules have already changed.

Soft Call to Action

If you are holding REIT investments, this is one area worth reviewing early.

Especially before YA2026 filings begin.

A simple review today can prevent a complicated explanation later.

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.

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