Crowe Chat Vol.1/2026

Introduction

The provision under subsection 21A(3A) of the MITA requires a company, limited liability partnership (LLP), trust body or co-operative society to notify the Director General of Inland Revenue (DGIR) of any changes in the accounting period through a Notification of Change in Accounting Period Form (Form CP204B).

Previous PR

The previous PR 6/2021 – Notification of Change of Accounting Period by a Company / Limited Liability Partnership / Trust Body / Co-Operative Society was issued on 29 December 2021.

Updated PR

The IRBM issued an updated PR 4/2025 – Notification of Change of Accounting Period by a Company / Limited Liability Partnership / Trust Body / Co-Operative Society on 28 November 2025.

Details of the Updated PR

PR 4/2025 replaces PR6/2021 with various changes, including:

• The interpretation of “revised estimate” has been updated to include the 11th month revision and an example which illustrates the 11th month revised tax estimate is included.
• The eligibility for exemption to submit the Estimate of Tax Payable Form (CP204) has been updated to exclude companies which have more than 20% shares held by companies incorporated outside Malaysia or by individuals who are not Malaysian citizens.
• Pursuant to the new Section 107C(11C) of the MITA, gains or profits arising from the disposal of capital assets are excluded from the requirement to submit an estimate of tax payable.

Introduction

The tax treatments on income from a construction contract business are prescribed under the Income Tax (Construction Contracts) Regulations 2007 [P.U. (A) 276/2007]. Pursuant to these regulations, income from a construction contract business shall be recognised, as construction contract activity progresses, by reference to the stage of completion of the construction contract activity at the end of financial year.

Previous PR

The previous PR2/2009 – Construction Contracts was issued on 22 May 2009.

Updated PR

The IRBM issued an updated PR5/2025 – Construction Contracts on 9 December 2025.

Details of the Updated PR

PR 5/2025 replaces PR2/2009 with notable updates as follows:

• The tax treatments under Practice Note 1/2024 which was issued on 29 March 2024 have been incorporated in this updated PR. With effect from the Year of Assessment (YA) 2023, where the final accounts of a construction contract can only be finalised after the date of completion of the construction contract, the actual gross profit or loss can be recognised in the earlier of the following periods:  
  1. twelve (12) months after the date of completion of the construction contract; or
  2. on the date when the final accounts of the construction contract is agreed upon between the contractor and the client.
• Where the actual gross profit from the contract is less than the total estimated gross profit that has been taxed in the previous years of assessment, a company may review all its prior years’ assessments. The updated PR has provided an option for taxpayers not to review the assessments for prior YAs if there are no tax implications for all the relevant YAs.
• Documentation requirements for tax audit purposes have been enhanced to include the Letter of Award, Progress Billing Certificate, Final Account, Certificate of Practical Completion, and other relevant supporting documents.

Introduction

Several changes were introduced for the tax treatments of resident individuals in Budget 2025 which were subsequently legislated in the Finance Act 2024. This PR has been updated to incorporate these changes.

Previous PR

The previous PR4/2024 - Taxation of a Resident Individual Part 1 - Gifts Or Contributions And Allowable Deductions was issued on 27 December 2024.

Update PR

The IRBM issued an updated PR7/2025 - Taxation of a Resident Individual Part 1 - Gifts Or Contributions And Allowable Deductions on 5 December 2025.

Notable changes

• Effective from YA 2025 to YA 2027, the allowable deduction for Skim Simpanan Pendidikan Nasional (SSPN) contribution can only be claimed by either the husband or the wife who makes savings in the SSPN, with a maximum amount of RM8,000 per YA for each child.  
• In respect of payments made to a childcare centre or kindergarten, where a husband and a wife are divorced, the tax deduction can be claimed by the former husband and the former wife provided that they both shared the costs for the childcare fees. The tax deduction is limited to the amount expended and not exceeding RM3,000 for a YA.
• Paragraph 46(1)(v) of the MITA provides that a deduction of up to RM2,500 can be claimed by an individual for the purchase of domestic food waste composting machine for household use, which can be claimed once every three (3) years between YAs 2025 and 2027.
• Subsection 46B of the MITA provides tax relief for Malaysian citizens and resident individuals for interest payments on their housing loan taken to finance the purchase of their first residential property. The deduction is allowed for three (3) consecutive YAs commencing from the first year the housing loan interest is paid. 
• Subsection 49(1B) of the MITA provides that a deduction of up to RM4,000 (increased from RM3,000) effective from YA 2025 can be allowed to an individual for premiums paid for insurance on education or for medical benefits.

The following proposed tax related laws relating to the Budget 2026 have been gazetted on 31 December 2025:

• Finance Act 2025
• Measures for the Collection, Administration and Enforcement of Tax Act 2025 (collectively known as “Acts”)

These Acts take effect on 1 January 2026. It is observed that there are no substantive changes compared to the earlier Bills.

Crowe’s highlights on the Finance Bill 2025 can be accessed via the following links:

Key Highlights of Malaysia’s Budget 2026  Key Highlights of the Finance Bill 2025

Introduction

Social or digital media influencers are individuals who have the power to influence others on social or digital media through their power, knowledge, position or relationship with users. 

These influencers are required to comply with the applicable tax treatments on income earned from social media platforms or from marketing and promotional activities.

New Guidelines

The IRBM issued Guidelines on Tax Treatment on Income of Social Media Influencer on 14 January 2026.

The purpose of the new guidelines is to provide clarity and guidance on how influencer income is treated for tax purposes, and to explain the scope of taxable income, allowable deductions, and compliance obligations under the MITA.

Details of the Guidelines

The salient points are as follows:

Activities of a Social Media Influencer 

• Creating and posting content 
• Promoting products/services 
• Endorsements 
• Livestreaming 
• Collaborating with brands

Category of Social Media Influencer

• Individual influencers - humans performing influencer activities, such as politicians, artistes, athletes, professionals, students, and homemakers.
• Object-based influencers - non‑human characters used to promote content (e.g. animated characters or virtual influencers).

Types of Revenue Received

• Direct payments from platforms (e.g., YouTube AdSense, TikTok Creator Fund)
• Fees for brand collaborations (e.g. endorsement or ambassador fees)
• Sale of goods / merchandise (e.g. physical and digital goods)
• Royalties derived from characters used on social media or digital rights
• Sale of social media accounts
• Non-cash benefits such as free products, services, discount vouchers or digital tokens with monetary value — at fair market value.

Taxability of the Income

• Any income received by influencers is subject to tax under the MITA, regardless of whether it comes from local or foreign platforms (e.g. YouTube), on both monetary or non-monetary items (e.g. sponsored items).
• Income is assessed under Section 4(a) (business income).
• If an influencer earns income from activities done overseas, that income is still treated as business income taxable in Malaysia under Section 4(a), regardless of whether the payment is received from outside Malaysia or in Malaysia.

Expenses Claimable

The expenses that can be allowed as deductions under Section 33(1) of the MITA from the activities as an influencer on social media include costs and fees for internet access, filming and editing costs and other expenses which are wholly and exclusively incurred entirely in the production of the gross income.