KUALA LUMPUR (Oct 18): The government has extended the exemption from individual income tax for foreign-sourced income for 10 years until Dec 31, 2036, as part of a slew of income tax exemptions and reliefs for individuals, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced in his Budget 2025 speech on Friday.
The tax exemption, which was previously effective on income earned from Jan 1, 2022 to Dec 31, 2026, applies to foreign-sourced income that has been subjected to tax in the country of origin.
Entitled recipients of the tax exemption are resident individuals in respect of all classes of income, except for income which is received through a partnership business in Malaysia.
Besides that, Anwar also announced that the government will raise the individual income tax relief on premiums paid for education and medical insurance from RM3,000 to RM4,000, effective from the year of assessment 2025.
To support the circular economy, the scope of tax relief for the purchase of electric vehicle chargers will also be extended to include the purchase of food waste composting machines for household use until the year of assessment 2027.
Meanwhile, under the social protection agenda, the government is extending the individual income tax relief for contributions to private retirement schemes and deferred annuity premium payments until the year of assessment 2030.
To encourage savings among parents for children’s tertiary education, it was proposed that the individual income tax relief of up to RM8,000 on net annual savings in the National Education Savings Scheme (SSPN) be extended for another three years until the year of assessment 2027.
In the same vein, individual income tax relief of up to RM2,000 for fees paid to childcare centres and kindergartens will also be raised to up to RM3,000 and extended for three years until the year of assessment 2027.
Anwar highlighted that the government also takes cognisance of the welfare and education of autistic children, increasing the tax relief limit for treatment and rehabilitation expenses for autistic children to RM6,000, from RM4,000 previously.
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