Every year, the government would review its tax or subsidy schemes and make changes accordingly to ensure that they are executed in a way that best benefits the nation and its people.
On 18 October 2024, the Malaysian government had presented the National Budget, where it announced changes in certain rates for year 2025. In anticipation of the new year, some private companies have also announced price adjustments for 2025. Some of these rate or price changes are either already in effect or are possibly in the pipeline for this year.
Given the short distance between Singapore and Malaysia and close cultural and business ties, many of those living in Singapore may occasionally travel cross the border to Malaysia and be curious to know the expenses that go up there in 2025.
Dividend Tax
As part of its tax reform exercise, the Malaysian government had introduced a tax on dividend income distributed from company profits to individual shareholders, consisting of resident individuals, non-residents and individuals who hold shares through nominees.
Effective from the year of assessment 2025, individuals who receive annual dividend income exceeding RM100,000 will have to pay a tax rate of 2%.
The imposition of this tax applies to dividend income distributed by companies based in Malaysia, with dividend income from abroad, dividend income distributed from the profits of companies that received pioneer status and reinvestment allowances and dividend income paid from the profits of shipping companies being exempted.
Imposition of the dividend tax is also not applicable to profit distributions made by the Employee Provident Fund (EPF) and unit trusts.
Previously, income tax was imposed on dividends distributed by companies at the company level but dividends distributed are exempted from tax at the shareholder level.
Electricity
The Malaysian government has been pivoting towards targeted subsidies to ensure that they will be applied in the best way possible in uplifting the people’s standard of living.
This includes improving the electricity subsidy mechanism by basing it on the level of electricity usage, thus encouraging efficient consumption of energy daily. It was further elaborated that 85% of the population will continue to benefit from subsidies while customers consuming over 600kWh will be required to pay full rate without subsidies.
Additionally, it was recently proposed that electricity tariffs could also be increased throughout the period of 2025 to 2027, as reported by several news outlets.
The hike is expected to impact business owners and shopping mall operators the most and an increase in electricity tariff and costs of doing business would possibly in turn means increased prices for the consumers.
Petrol
During the tabling of the National Budget 2025, the government had expressed the possibility of implementing targeted subsidies for RON95 petrol in the middle of 2025.
There are two types of petrol in Malaysia, which are the RON 95 and RON97. RON 95 petrol has a lower octane rating of 95 compared to RON 97, which has an octane rating of 97. The RON 95 petrol is commonly used for most affordable cars. Meanwhile, the RON 97 petrol is reserved for vehicles with a motor greater than 2,500cc.
Last year, the government had pulled blanket subsidy for diesel and started implementing targeted subsidy since 10 June 2024. The government had reset diesel price in the country to realign with market price while continuing to provide cash assistance to the logistics sector and other eligible sectors so these target groups will still enjoy low diesel prices.
Health Insurance
During the end of 2024, news that health insurance premiums were set to increase by 40% to 70% due to medical cost inflation had sent shock waves across Malaysia. It was reported that some policyholders had received letters of notification by their insurance providers on a hike in premiums ranging between 40% to 70% starting from year 2025.
To address the concerns regarding the hike, Malaysia’s central bank, Bank Negara Malaysia (BNM) had stepped in and announced interim measures in December 2024 to help manage the impact of premium adjustments.
Since then, insurance providers have assured customers that the changes in premiums will be spread over a minimum of three years effective from January 2025 for all policyholders affected by the repricing. This measure will remain in place until the end of 2026. With this measure, at least 80% of policyholders are expected to experience yearly premium adjustments of less than 10%.
For policyholders aged 60 years old and above who are covered under the minimum plan within a health insurance product, there will be no premium adjustments temporarily for one year from their policy anniversary.
Express Delivery Service
As part of its annual price review, DHL Express had announced that it will implement price adjustments averaging 6.9% increase in Malaysia starting January 2025.
The courier services provider adjusts prices of its services annually, based on inflation and administrative costs.
In Malaysia, DHL Express remains one of the few delivery services that provide quality international shipping services in an express turnaround period of one day.
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