Prime Minister Anwar Ibrahim said the proposed tax for RM100,000 in dividends is RM700 to RM800. (Bernama pic)
KUALA LUMPUR: Prime Minister Anwar Ibrahim has defended the 2% tax on ividend income above RM100,000 proposed in the 2025 budget.
Speaking in the Dewan Rakyat today, Anwar said the tax applies to both listed and non-listed companies, promoting a progressive tax system.
“If someone has RM2 million in shares with RM100,000 dividends, they should pay. For RM100,000, that’s only about RM700 to RM800 per year.
“Surely, they can pay it. They hold RM2 million in shares. So we made the decision (to impose the tax) to ensure a small contribution from those who can afford (to hold shares),” he said in response to a question from Khoo Poay Tiong (PH-Kota Melaka).
Khoo had inquired about the mechanism for implementing the 2% tax on dividend income exceeding RM100,000.
According to the appendix to the 2025 budget proposals, exemptions will be granted to dividend income from foreign sources; dividends distributed from the profits of pioneer-status companies and reinvestment allowance; dividends paid, credited or distributed from the profits of tax-exempted shipping companies; and dividends distributed by cooperatives.
The exemptions will also be applicable to dividends declared by closed-end funds; dividends received by residents from Labuan entities; and any pre-existing exemptions on dividends at the shareholder level.
The Small and Medium Enterprises Association expressed concerns that the tax could discourage business growth and profits for small businesses.
Anwar, who is also the finance minister, gave an assurance that small and medium-sized enterprises would be largely unaffected. “Only those with shareholdings worth around RM2 million will start paying,” he said.
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