Guides
Dividends and Dividend Tax: A Guide to the Single-Tier System
Updated: 8 November 2026 Independently fact-checked.
# Dividends and Dividend Tax: A Guide to the Single-Tier System
The single-tier dividend system exempts dividends in the hands of shareholders; from YA 2025 individuals are subject to the 2% Dividend Tax on dividends above the threshold. This article explains the system, the new tax, reporting and exemptions.
Updated: 8 November 2026 — Independently fact-checked.
- Review date: 8 November 2026
- Year of assessment: YA 2025+ for the 2% Dividend Tax; threshold/rates for YA 2026 onwards subject to review
- Status: Published
The single-tier dividend system
The single-tier system was introduced from the year of assessment 2008 replacing the imputation system; final income tax is imposed at the company level. "All dividends are exempt from tax in the hands of the recipient" (R1). Companies that still have s.108 credits were given a transitional period until 31.12.2013 (R1).
2% Dividend Tax (individuals, YA 2025+)
From Year of Assessment 2025, individual taxpayers who receive dividend income exceeding RM100,000 a year are taxed at a rate of 2% (R2, R3, R5). This tax applies only to individuals (not organisations/corporate shareholders); there is no withholding tax on dividends received (R2).
Reporting
Dividend income received exceeding RM100,000 must be reported by the taxpayer in Form B/BE; the Dividend Tax is calculated at the individual level, not withheld by the dividend payer (R2).
Exemption in the hands of the recipient
Single-tier dividends are exempt in the hands of shareholders other than individuals according to paragraph 12B of Schedule 6 ACP; no tax is deducted under subsection 108(1) ACP (R4). For individuals who receive one or more dividend vouchers, if the gross dividends exceed RM100,000, the dividends must be declared as part of aggregate income according to paragraph 6(1)(r) ACP (R4).
Dividend vouchers
From YA 2025, companies that pay/distribute dividends must issue a dividend voucher stating the amount of the dividend (s.108 ACP); if paid in the form of property, the market value is stated; the new voucher format is available on the official HASiL portal (R3, R4).
Foreign dividends
Foreign dividends received by companies are exempt under P.U.(A) 235/2022 (subject to conditions); when a company distributes dividends to individuals, they are subject to Dividend Tax if they exceed RM100,000; an exemption from Dividend Tax is also granted for dividend income that is exempt at the individual level (R2).
Figures & facts not yet confirmed
- The 2% rate and the RM100,000 threshold for YA 2026 onwards (review after the Budget/Finance Act; Budget 2027 has been tabled — verify the enactment status).
- Detailed Dividend Tax calculation guidelines (HASiL: to be issued later — verify the publication).
- The full definition of "dividend income" including exempt dividends (interaction of P.U.(A) 235/2022, P.U.(A) 451/2024 and other exemption orders).
- Details of the electronic dividend voucher (e-voucher) and e-Invoice reporting.
Official sources
All sources below were reviewed on 8 November 2026. Official HASiL pages and documents: