How dividend tax works in Malaysia
Malaysia is under a single-tier corporate tax system, so companies generally do not deduct dividend withholding tax when they distribute profits. Corporate shareholders also usually receive exempt dividends.
The separate 2% dividend tax applies to individual shareholders, including residents, non-residents and shares held through nominees, on chargeable dividend income above RM100,000 from resident companies.
Foreign dividends can still be taxed or exempt depending on residence and the specific exemption window. For resident individuals, foreign-sourced income received in Malaysia is generally exempt until 31 December 2036 subject to conditions, but source-country withholding tax may still apply.
Tax rates at a glance
- Dividend withholding tax
- 0%Single-tier
- Individual dividend tax
- 2%
- Foreign dividend tax
- 0% / conditional
- Corporate dividend tax
- 0%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
InvestorsFoundersHolding companiesFamily officesHigh earners
Watch out for
- The 2% dividend tax is on chargeable dividend income after eligible deductions, not on every dividend dollar mechanically.
- Budget 2026 proposed a similar 2% rule for LLP profit distributions above RM100,000 from YA 2026, but that is still a proposal.
- Foreign dividend planning is usually about source-country withholding tax, treaty relief and the recipient's residence rules, not Malaysian withholding tax.
Frequently asked questions
Does Malaysia tax dividends?
Yes, but mostly in a limited way. Dividends from resident companies are generally exempt under the single-tier system, while individual shareholders can face a 2% tax above RM100,000.
Does Malaysia have dividend withholding tax?
No ordinary dividend withholding tax applies under the single-tier system.
Are foreign dividends taxed in Malaysia?
Foreign-sourced income received by resident individuals is generally exempt until 31 December 2036 subject to conditions, but foreign tax and treaty rules can still matter.