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Introduction

Malaysia has enacted the Cross-Border Insolvency Act 2026 (Act 877) (“Act”), which received Royal Assent on 20 January 2026 and was published in the Gazette on 30 January 2026. The Act will come into operation on a date to be appointed by the Minister charged with responsibility for law by notification in the Gazette.

The Act adopts the principles of the UNCITRAL Model Law on Cross-Border Insolvency dated 30 May1997, representing a significant modernisation of Malaysia's insolvency regime.

Key Objectives

The Act's objectives include fostering cooperation between Malaysian and foreign courts, providing legal certainty for trade and investment, ensuring fair administration of cross-border insolvencies, maximising debtor property value, and facilitating the rescue of financially troubled businesses.

Scope of Application

The Act applies to corporations as defined in the Companies Act 2016 and the Labuan Companies Act 1990, but expressly excludes individuals under the Insolvency Act1967, limited liability partnerships, and registered businesses under various state and federal business licensing statutes.

Notably, the Act contains significant carve-outs for regulated financial institutions. It does not apply to licensed financial institutions, Islamic financial institutions, development financial institutions, member institutions under the Malaysia Deposit Insurance Corporation Act 2011, stock exchanges, derivatives exchanges, clearing houses, central depositories, and various Labuan-licensed entities including Labuan banks, investment banks, insurers, reinsurers, takaful operators, trust companies, and foundations.

Recognition of Foreign Proceedings

The Act defines "foreign proceedings" as collective judicial or administrative proceedings in a foreign State, including interim proceedings, under the law relating to insolvency in which the property and affairs of the debtor are subject to control or supervision by a foreign court, for the purposes of reorganisation or liquidation. This broad definition encompasses a wide range of insolvency-related processes, whether formal court-supervised proceedings or administrative procedures, provided they involve collective creditor participation and supervisory oversight over the debtor's property and affairs. Importantly, interim or provisional proceedings also fall within the definition, enabling foreign representatives to seek recognition even while foreign insolvency proceedings are at an early stage.

A foreign representative may apply directly to the High Court in Malaya or the High Courtin Sabah and Sarawak for recognition of foreign proceedings. Applications for recognition must be accompanied by a certified copy of the decision commencing the foreign proceedings and appointing the foreign representative, or a certificate from the foreign court affirming the existence of the foreign proceedings and the appointment. The High Court is required to determine applications for recognition at the earliest possible time.

Effects of Recognition and Relief

Upon recognition, individual actions concerning the property, rights obligations or liabilities of the debtor is stayed, execution against debtor property is stayed, and the right to dispose of debtor property is suspended. These have the same effect as a winding-up order under Malaysian law.

The Court may also grant discretionary relief upon recognition of any foreign proceedings, including orders staying actions, suspending property disposal rights, directing examination of witnesses, and entrusting property administration to the foreign representative or a Malaysian insolvency office-holder.

Access Rights

Foreign representatives have direct access to Malaysian courts and may appear in person or through an advocate. Foreign creditors have the same rights as Malaysian creditors and cannot be ranked lower than general unsecured creditors solely due to their foreign status, though foreign tax, social security, and superannuation claims may be excluded.

Cooperation with Foreign Courts and Representatives

The Act mandates cooperation between Malaysian courts and insolvency office-holders with their foreign counterparts to the maximum extent possible, including direct communication and information sharing. Cooperation may include coordinating administration of debtor property, implementing agreements on coordination of proceedings, and managing concurrent proceedings.

Concurrent Proceedings

After recognition of foreign main proceedings, Malaysian insolvency proceedings are generally limited to property located in Malaysia. Where concurrent proceedings exist, the Court must ensure consistency between relief granted and Malaysian proceedings and that automatic stays do not apply if foreign main proceedings are recognised after Malaysian proceedings have commenced.

Protection of Creditors and Interested Persons

In granting relief, the Court must ensure adequate protection for creditors (including Malaysian creditors, secured creditors, and hire-purchase parties) and may impose conditions such as requiring security. Transferring property outside Malaysia requires court leave and certification that Malaysian creditors' claims below a prescribed threshold have been satisfied.

Public Policy Exception

The Court retains discretion to refuse any action or relief that would be contrary to the public policy of Malaysia.

Avoidance Actions

Upon recognition of foreign proceedings, a foreign representative has standing to apply to the Court for avoidance actions under relevant provisions of the Companies Act 2016 and the Labuan Companies Act 1990. These include actions relating to preferences, floating charges, and other transactions that may be detrimental to creditors. However, this power does not apply retrospectively to transactions entered into before the Act comes into operation.

Regulatory Restrictions

The Act contains important restrictions where regulatory authorities are involved. Recognition, relief, and cooperation under the Act are not permitted if theywould be prohibited by certain provisions of the Financial Services Act 2013, Islamic Financial Services Act 2013, Malaysia Deposit Insurance Corporation Act 2011, or Capital Markets and Services Act 2007.

The Act also protects the finality of payment and netting arrangements under financial services legislation and the enforceability of netting provisions in qualified financial agreements. Additionally, where regulatory authorities such as Bank Negara Malaysia, the Securities Commission Malaysia, or the Labuan Financial Services Authority have issued specific directions or orders in respect of a person for purposes of financial stability or systemic risk management, recognition and relief under the Act require the prior written approval of the relevant authority.

What This Means for Local Players

Malaysian corporations and insolvency practitioners now have a structured framework for dealing with cross-border insolvencies involving foreign counter parties. Local creditors benefit from explicit statutory protections as the Act mandates that Malaysian courts must ensure their interests are adequately protected before granting relief to foreign representatives, and any transfer of debtor property outside Malaysia requires prior court leave and certification that Malaysian creditors below a prescribed threshold have been satisfied. This offers meaningful safeguards against value leakage in cross-border restructurings.

Malaysian insolvency office-holders are expressly authorised to cooperate and communicate directly with foreign courts and representatives. This legitimises cross-border coordination efforts and should reduce uncertainty when Malaysian proceedings run concurrently with foreign proceedings. However, where concurrent proceedings exist, Malaysian proceedings will generally be limited to assets located in Malaysia, which may constrain the reach of local office-holders in complex group restructurings.

For local financial institutions, the broad carve-outs in the Schedule are significant. Licensed banks, insurers, securities market operators, and other regulated entities remain subject to their sector-specific resolution regimes under the Financial Services Act 2013, Islamic Financial Services Act 2013, and the Malaysia Deposit Insurance Corporation Act 2011, rather than this Act. This preserves regulatory control over systemically important institutions and ensures continuity in how their distress situations are managed.

What This Means for Foreign Investors

Foreign investors and multinational groups with Malaysian subsidiaries or assets now have a clear pathway to seek recognition of foreign insolvency proceedings in Malaysia. The Act grants foreign representatives direct access to the Malaysian High Courts without requiring submission to full local jurisdiction, removing a significant procedural barrier. Applications for recognition must be determined at the earliest possible time.

Once foreign main proceedings are recognised, the Act provides automatic stays on individual creditor actions and executions against the debtor's Malaysian assets, mirroring the effect of a local winding-up order. This is a substantial benefit for foreign insolvency practitioners seeking to preserve asset value and prevent a race to enforcement by local creditors. Foreign representatives may also apply for discretionary relief, including orders entrusting the administration of Malaysian assets to them or examining witnesses and gathering evidence.

Foreign creditors are afforded equal treatment with Malaysian creditors in terms of participation rights and cannot be ranked lower than general unsecured creditors solely by reason of being foreign. However, foreign tax claims, social security claims, and superannuation claims may be excluded from Malaysian proceedings, which investors should factor into recovery expectations.

Critically, cooperation and recognition under the Act may be refused or subject to prior regulatory approval where financial stability concerns are engaged. Foreign investors dealing with Malaysian financial institution counterparties should be aware that the Act's benefits may not extend to situations involving regulated entities or where Bank Negara Malaysia, the Securities Commission, or the Labuan Financial Services Authority has issued specific directions.

Conclusion

The Cross-Border Insolvency Act 2026 aligns Malaysia with international best practices under the UNCITRAL Model Law. Stakeholders should familiarise themselves with the Act and monitor for its commencement date.

Please contact us if you have any questions regarding the Act's implications for your business.

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The Stamp Act 1949 (“Act”) has long served as a foundational element of Malaysia’s tax landscape, and, like all enduring legislation, it evolves to meet contemporary needs. In recent developments, the introduction of the Stamp Duty Self-Assessment System (“SDSAS”) has been on everyone’s mind – starting with Phase 1 kicking off on 1 January 2026. With this new system, taxpayers are required to first categorise their instruments according to the First Schedule of the Act, then independently and accurately determine the rate payable to the Collector and subsequently make such payments to the Collector upon filing their stamp duty return on SDSAS. This represents a marked departure from the previous framework, under which taxpayers were only required to submit their instruments online for the Collector to adjudicate and issue an official assessment notice specifying the stamp duty due – upon which the taxpayers would make payment.

With such a significant change within the stamp duty framework, the Inland Revenue Board (“IRB”) has introduced the Voluntary Disclosure Program (“VDP”).The VDP is aimed to facilitate the transition between the past framework and the newly implemented system, acting as an automatic blanket exemption for all eligible taxpayers. However, it is important to note that this program and the exemptions that come along with it would only be available for 6 months from 1January 2026 to 30 June 2026 for instruments executed between year 2023 to year2025.

Many taxpayers have asked why the Stamp Duty Voluntary Disclosure Programme (VDP) applies only to instruments executed between 2023 and 2025, and whether documents executed prior to 2023 fall outside stamp duty exposure.

During a recent dialogue session with CTIM members, the Director General of Inland Revenue ("DGIR") verbally indicated that, as a matter of administrative practice, the Inland Revenue Board ("IRB") generally audits stamp duty compliance for a period of up to three years only. This administrative approach is broadly aligned with the IRB’s general audit framework.

However, it is important to note that, legally, the Stamp Act 1949 provides a time bar of five years for the assessment and recovery of deficient stamp duty. The DGIR also clarified that instruments executed prior to 2023 are not exempt from stamp duty.

Stamp duty remains legally payable under the Act as there is no remission or exemption order granting a blanket exemption for such instruments. A blanket exemption would potentially require refunds to be made to taxpayers who have already paid duty, which is not the current policy approach. Accordingly, while instruments executed before 2023 may, in practice, be less likely to be subject to audit under current IRB administrative practice, they remain legally chargeable to stamp duty.

Our view is that the three-year scope reflects the IRB’s current administrative practice rather than a limitation imposed by legislation, and such practice is not legally binding nor guaranteed to remain unchanged. Taxpayers should therefore assess their exposure based on statutory provisions rather than solely on current audit practice.

The overarching principle of the Act is that every instrument must be stamped at the prescribed rate. In practice, many taxpayers fall foul of the late-stamping provisions, rendering them liable under Section 47A of the Act. However, non-compliance not only attracts penalties imposed by the Collector, but also carries the more serious consequence that an unstamped document may be inadmissible as evidence in court, potentially undermining a party’s claims or defences should a dispute arise.

Specifically, under Section 47 of the Act, taxpayers are required to file a stamp duty return and ensure stamp duty payable is made within 30 days of the date of execution in Malaysia or the date of receipt in Malaysia, and failure to do so would attract penalties. Subsequently, Section 47A of the Act sets out the penalties for late stamping, whereby the “late” taxpayer would be subject to fifty ringgit (RM50) or ten percent (10%) of the amount of the unpaid duty if the instrument is stamped within three (3) months after the time for stamping, or one hundred ringgit (RM100) or twenty percent (20%) of the amount of the unpaid duty, whichever sum is greater in both cases.

Under Section 47A(2) of the Act, the Collector has the power to remit or reduce the amount of duty payable. Hence, the Collector has introduced the VDP to grant a remission period for eligible taxpayers, which applies to instruments executed between 1 January 2023 and 31 December 2025. For the VDP to apply, it is exclusive to taxpayers who have duly executed and stamped the relevant instruments, but have not paid the stamp duty. However, if the taxpayer has had the instrument stamped and the duty paid, then the VDP does not apply to such parties. Given that the VDP is designed as an automatic blanket exemption, those eligible are not required to file appeals of any sort, and the system will automatically display that the payment for duty is waived.

With the introduction of the SDSAS, the likelihood of the Collector “rejecting” a taxpayer’s submission may increase. Accordingly, taxpayers should be aware of the appeals process in the event of any dispute or dissatisfaction with an assessment by the Collector. Where a taxpayer disagrees with the Collector’s assessment, the taxpayer may, within thirty (30) days from the date of the assessment, lodge a written notice of objection with the Collector. Upon determination of the objection, the Collector shall notify the taxpayer inwriting of the decision. If the taxpayer remains dissatisfied with the Collector’s decision, the taxpayer may, within twenty-one (21) days from the date of notification, appeal the decision to the High Court.

The VDP can be seen as a nudge from the Collector to the taxpayers, a nudge forward in the direction of modernity through the SDSAS. Therefore, the bottom-line of the VDP is that it is introduced to encourage taxpayers to independently file, stamp and pay for their instruments in the future, fostering a culture of compliance and individual integrity under the SDSAS.

We are pleased to announce that our partners Andreanna Ten Maven, Mohamad Izahar Mohamad Izham and Nadarashnaraj Sargunaraj have contributed as authors of the Malaysia chapter of the International Comparative Legal Guide (ICLG) – Public Procurement 2026, providing a practical overview of Malaysia’s public procurement regime, including core procedures, eligibility requirements, remedies, and recent regulatory updates.

Our chapter highlights Malaysia’s major energy transition shifts, including carbon pricing, electricity market liberalisation, renewable energy exports, CCUS regulation, BESS deployment, and upstream discoveries driving both security and sustainability under the NETR.

On 26 October 2025, Malaysia and the US signed the Agreement on Reciprocal Trade (ART) during the 47^th ASEAN Summit in Kuala Lumpur.  Under Executive Order 14257 issued by the US President on 2 April 2025, the agreement is a US proposal to renegotiate tariffs on Malaysia from 25 percent to 19 percent.

The agreement covers many areas including among others in relation to Good Regulatory Practices (GRP).  This update will only focus on Good Regulatory Practices (GRP), and it is beyond the scope of this update to discuss the ART as a whole.

Good Regulatory Practices (GRP)

Article 2.8 in relation to Good Regulatory Practices (GRP) specifically states that:

Malaysia shall adopt and implement good regulatory practices as  set out in Article 2.21 of Annex III that ensure greater transparency,  predictability, and participation throughout the regulatory lifecycle.

Under Annex III: Specific Commitments, Article 2.21 in relation to Adoption and Implementation of Good Regulatory Practices (GRP) sets out the following:

With respect to the adoption and implementation of  good regulatory practices at the central level of government, Malaysia  shall─

(a)    ensure  that laws, regulations, procedures, and administrative rulings are promptly  published and made easily         accessible online;

(b)    under  normal circumstances,[1] publish  and make easily accessible online the text of proposed regulatory          measures,[2] as  well as any regulatory impact analysis, an explanation of the regulation, and  its objective;

(c)     conduct  public consultations for proposed regulatory measures in a transparent  manner; allow adequate         time for interested persons, domestic and foreign, to  submit comments, taking into account the complexity         or possible impact of the  proposed regulation; and give consideration to comments received;

(d)    give  reasonable notice of planned regulatory measures and publish regulatory  policy priorities that will be          developed, modified, or eliminated in the near  term;

(e)    use  publicly accessible high-quality data, evidence, technical information, and  risk assessments, where          appropriate, during the planning and development of  regulation;

(f)     support  international regulatory cooperation through the use of, as appropriate,  relevant international         standards, guides, and recommendations to avoid  unnecessary obstacles to trade;

(g)    conduct  reviews of regulation in effect to determine whether new information or other  changes justify          modification or repeal of regulation; and use tools, such as  regulatory impact analysis, to assess the need for          and possible impacts of  regulations, which could also include alternative approaches to regulation,  where          appropriate.

Key observations on the Good Regulatory Practice (GRP) requirements

• The requirement operates ‘one way’ for Malaysia as it only requires Malaysia to comply, perhaps on the assumption that the US has already complied with such Good Regulatory Practice (GRP) requirements in its domestic legal framework.
• The requirement is only imposed at the ‘central government’ level which is interpreted as Federal Government level and thus, is an important consideration given the autonomy of States and Local Governments to legislate on their own.
• The requirements from (a) to (g) Annex III: Specific Commitments, Article 2.21 already are reflective in our National Policy on Good Regulatory Practice (NPGRP).  The author does not intend to cover this exhaustively, but these requirements can be seen for example in our Regulatory Process Management System (RPMS) framework, adoption of evidence-based tools such as Regulatory Impact Analysis (RIA) and Behavioral Insights (BI), and specific elements there under such as the consultation process and option development.

According to the Attorney General’s Chambers (AGC), ART will only come into effect 60 days after both parties exchange written notifications confirming that their domestic legal procedures have been completed.  It is thus unclear when this will specifically occur given the range of matters agreed in the ART that would require domestic policy to be revisited.

Notwithstanding this, it is the author’s view that signing the bilateral reciprocal trade agreements would have the impact of requiring parties to upgrade domestic requirements in line with international standards, particularly on Good Regulatory Practices (GRP).[3]  Malaysia is no stranger to this where it ratified the multilateral Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 30 September 2022 which also included Good Regulatory Practices (GRP) requirements in Chapter 25: Regulatory Coherence.  

It is also the author’s view that from a domestic perspective on Good Regulatory Practices (GRP), it can be perceived that our domestic Good Regulatory Practices (GRP) ecosystem is already in line with best practice. In line with ASEAN’s Vision 2045 call to action to ‘embed’ GRP in every workstream, such requirements have already seamlessly been integrated into the domestic policy and regulatory development cycle.  It is then with optimism that we look forward to the next transformation of our National Policy on Good Regulatory Practice(NPGRP) that will set the benchmark of our Good Regulatory Practices (GRP)ecosystem for years to come.

The Agreement can be accessed here https://www.miti.gov.my/ART.                                                                                                                

If you have any questions or require any additional information, please contact our Partner and Head of the Government Advisory Practice, Mohamad Izahar Mohamad Izham at izaharizham@ziclegal.com of Zaid Ibrahim & Co.  

This alert is for general information only and is not a substitute for legal advice.

[1] “normal circumstances” do not include, for example, situations in which: publication in accordance with subparagraph (b) would render the regulatory measure ineffective in addressing the particular harm to the public interest that the regulatory measure aims to address; urgent problems (for example, of safety, health, or environmental protection) arise or threaten to arise for Malaysia; or the regulatory measure has no substantive impact upon members of the public, including persons of the United States.

[2] “regulatory measures” means measures of general application adopted, issued, or maintained by a regulatory authority with which compliance is mandatory, except: general statements of policy or guidance that do not prescribe legally enforceable requirements or measures concerning: (i) military, foreign affairs, or national security functions of the Government; (ii) public sector management, including personnel, pensions, public property, loans, grants, benefits, or contracts;(iii) departmental organization, procedure, or practice; or (iv) taxation, financial services, anti-money laundering, monetary policy, exchange rate policy, or government procurement. For greater certainty, a regulatory authority at the central level of government does not include legislatures or courts.

[3] At the time of writing, it is understood that the only two ASEAN countries that have signed the bilateral reciprocal trade agreements with the US is Cambodia and Malaysia.

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On 3 October 2025, with robust governmental support and momentum, the Ministry of Finance has successfully gazetted the order and the rules in relation to Pulau 1 of Forest City Special Financial Zone (“Single Family Office Order and Rules”).

While wealthy families have historically chosen specific established tax exempted jurisdictions to establish their generational wealth management family office structures, Malaysia is now well-positioned to compete with these jurisdictions in attracting family office establishments by having specific tax incentives and stamp duty exemptions to attract both Malaysian and foreign families to establish their family offices within the Forest City Special Financial Zone.

To date, 6 families have received conditional approval from the Securities Commission (“SC”), with indicative assets under management (“AUM”) of close to RM400 million.

Single Family Office Incentive Scheme (“Scheme”)

Families intending to set up their family office under this Scheme must establish 2 Malaysian incorporated companies - the Single Family Office Vehicle (“SFOV”) and the Single Family Office Management Company(“SFO MC”).  Both the SFOV and the SFO MC must be wholly owned, directly or indirectly, by one or more individuals, all of whom should be members of a single family. “Single Family” means a family whose members are individuals who are lineal descendants of a single ancestor and includes:

(a)           the spouse;

(b)           the biological child;

(c)           the stepchild; and

(d)           the child adopted in accordance with any written law.

The SFOV is solely for the purpose of holding the assets and investments of the single family, while the SFO MC is for the purpose of managing such assets and investments. The SFO MC is not required to be operating in Pulau 1.

SFOV

A qualifying company may apply for the Scheme to the Minister through the SC from 1 September 2024 to 31 December 2034.

A “qualifying company” is a single family fund company which [1]:

(a)           is incorporated under the Companies Act 2016 and resident in Malaysia;

(b)           is wholly owned, directly or indirectly, by a member of a single family;

(c)           operates in Pulau 1 of Forest City Special Financial Zone; and

(d)           is established solely for the purpose of holding the asset and investment activity for the interest of

                members of a single family.

A “qualifying company” will not be regarded as a qualifying company for the purposes of the Scheme if, it has claimed or been granted other tax incentives under Malaysian law. Specifically, the company will be disqualified if [2]:

(a)           a claim has been made for investment allowance for the service sector under Schedule 7B to the Income

               Tax Act 1967;

(b)           any incentive has been granted under the Promotion of Investments Act 1986;

(c)           an exemption has been granted under paragraph 127(3)(b) or subsection 127(3A) of the Income Tax Act

               1967;

(d)           an incentive scheme has been approved by the Minister under any rules made pursuant to section 154 of

                the Income Tax Act 1967;or

(e)           a claim has been made for deduction under any rules made under section 154 of the Income Tax Act 1967,

                except for:

               (i)           allowances under Schedule 3 to the Income Tax Act 1967;

               (ii)          deductions under the Income Tax (Deduction for Audit Expenditure) Rules 2006; or

               (iii)         deductions under the Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax

                             Filing Fee) Rules 2020.

Upon obtaining SC’s approval for the tax incentives granted pursuant to the Scheme, an approved company shall comply with the conditions imposed by the Minister which shall include the following conditions [3]:

(a)           for each year for the first period of 10 years of assessment, the approved company shall obtain a

                certification from SC that the approved company:

                (i)            has employed at least 2 full-time employees whom one of the employees is a professional

                                investor with a minimum salary of RM10,000;

                (ii)           has not utilised bank deposits for local investment;

                (iii)           at the end of the year of assessment—

                                (A)      has incurred an annual local operating expenditure of not less than RM500,000;

                                (B)      has assets under its management of not less than RM30 million; and

                                (C)      in relation to a local investment, has made an investment of not less than RM10 million or

                                           10% of the assets under its management referred to in subparagraph(a)(iii)(B), whichever is

                                           the lower; and

                (iv)          has not carried on any other business in Malaysia;

(b)           for each year for the following period of 10years of assessment, the approved company shall obtain a

                certification from the SC that the approved company at the end of the year of assessment:

                (i)             has assets under its management of not less than RM50 million;

                (ii)            in relation to a local investment, has made an investment of not less than RM10 million or

                                10% of the assets under its management referred to in subparagraph (b)(i), whichever is greater;

                (iii)           has employed at least 4 full-time employees; and

                (iv)          has incurred an annual local operating expenditure of not less than RM650,000.

(c)            the approved company shall comply with the conditions provided for under section 65B of the Income

                 Tax Act 1967; and

(d)            the approved company shall comply with any guidelines issued by the SC.

Tax incentives under the Forest City Special Financial Zone framework

Pulau 1 was designated as a duty-free island and officially recognised as a “Designated Area” under Malaysia’s Sales Tax and Services Tax regimes, with similar duty-free status as Langkawi, Labuan, and Pangkor.

Effective 1 September 2024, the tax incentives for the SFOV include:

(a)           0% income tax rate for the first period of 10 years of assessment and 0% income tax rate the following

                period of 10 years of assessment by the approved company.[4]

(b)           Full exemption on gains from share disposal from 1 September 2024 to 31 December 2034, subject to

                further conditions.[5]

(c)           Full exemption on income received from any qualifying persons for income received on or before 31

                August 2034, subject to conditions.[6]

(d)           10% of industrial building allowance on the capital expenditure for the construction or purchase of an

                industrial building for Year of Assessment 2024 onwards until 31 December 2034, subject to conditions.[7]

(e)           Deduction up to RM500,000 maximum for certified relocation costs, subject to conditions.[8]

Stamp Duty exemptions under the Forest City Special Financial Zone framework

Apart from tax incentives, transactions and transfers of a qualifying asset executed from 1 September 2024 to 31 December 2034 may qualify for a range of stamp duty exemptions introduced by the Government to encourage investment and the establishment of family offices in the area.

The key stamp duty exemptions are:

(a)           Exemption of stamp duty for transfers of qualifying assets between single family fund companies and

                their related family entities.[9]

(b)           50% remission on loan or financing agreements for eligible individuals[10] and qualifying investors[11]

                purchasing completed residential or commercial units in Pulau 1.

(c)           50% remission on property transfer instruments for eligible individuals[12] and qualifying investors[13]

                purchasing completed residential or commercial units in Pulau 1.

Real Property Gains Tax (“RPGT”) exemptions under the Forest City Special Financial Zone framework

RPGT, a tax imposed on profits arising from the disposal of real property in Malaysia, now offers progressive exemptions for non-citizen and non-permanent resident individuals disposing of property within Pulau 1 of Forest City Special Financial Zone. Effective from 1 September 2024 to 31 July 2034, the Scheme provides for progressive reductions in RPGT rates during the initial years of ownership, culminating in a full exemption after the sixth year, to promote long-term property investment in Pulau 1.[14]

The introduction of the newly implemented Single Family Office Order and Rules marks a significant milestone in Malaysia’s efforts to position itself as a regional hub for wealth management and family office activities. The comprehensive incentives framework under the Forest City Special Financial Zone reflects the Government’s continued commitment to ensuring the success of the Scheme, as evidenced by the growing number of family office applications currently being reviewed by the SC.

Please feel free to reach out to the contributing partners and associates to this alert – Chua Wei Min, Lee Lily @ Lee Eng Cher, Sarah Menon and Coe Tay for further information.

[1] Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone)Rules 2025

[2] Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone)Rules 2025

[3] Income Tax (SingleFamily Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone)Rules 2025

[4] Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone)Rules 2025

[5] Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025

[6] Income Tax (Income of Non-Resident Person) (Pulau 1 of Forest City Special Financial Zone)(Exemption) Order 2025

[7] Income Tax (Industrial Building Allowance) (Pulau 1 of Forest City Special Financial Zone) Rules 2025

[8] Income Tax (Deduction of Cost for Relocation of Business) (Pulau 1 of Forest City Special Financial Zone) Rules 2025

[9] Stamp Duty (Single Family Fund Company) (Pulau 1 of Forest City Special Financial Zone)(Exemption) Order 2025

[10] Stamp Duty (Instrument of Loan or Financing Agreement in relation to Individual) (Pulau 1 of Forest City Special Financial Zone) (Remission) Order 2025

[11] Stamp Duty (Instrument of Loan or Financing in relation to Qualifying Person) (Pulau 1 of Forest City Special Financial Zone) (Remission) Order 2025

[12] Stamp Duty (Instrument of Transfer in relation to Individual) (Pulau 1 of Forest City Special Financial Zone)(Remission) Order 2025

[13] Stamp Duty (Instrument of Transfer in relation to Qualifying Person) (Pulau 1 of Forest City Special Financial Zone)(Remission) Order 2025

[14] Real Property Gains Tax (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025

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The Budget 2026, announced on 10 October 2025, highlights significant reforms in Malaysia’s tax administration aimed at enhancing compliance and efficiency. Key measures include the nationwide implementation of the e-invoicing initiative in 2026 and the introduction of a stamp duty self-assessment system to promote greater taxpayer compliance.

In addition, the government aims to expedite the refund process for overpaid taxes within the next year. The long-anticipated Carbon Tax is also set to be introduced in 2026, with an initial focus on the iron, steel, and energy sectors.

Beyond these new developments, the government continues to propose new incentives and exemptions, as well as extensions of existing ones, to support the nation’s economic growth.

This alert highlights the key updates from Budget 2026 for taxpayers to stay informed of the forthcoming changes to Malaysia’s tax laws and administrative policies.

Corporate Tax

There were several key announcements from a corporate tax perspective during the Budget 2026 and this includes, among others, accelerated capital allowance (ACA), green technology investment, and incentives for venture capital companies and companies in the tourism sector. It was proposed, amongst others, that:

• Capital Expenditure for ICT – companies can claim ACA on capital expenditure for plant, machinery and information and communication technology (ICT) equipment. The initial allowance of 20% and 40% annual allowance under ACA are intended for qualifying capital expenditure incurred from 11 October 2025 to 31 December 2026.  
• Tourism Industry – tax deduction of up to RM500,000 on capital expenditure for project operators registered with the Ministry of Tourism, Arts and Culture, undertaking tourism projects involving renovation and refurbishment of business premises. In relation to tourism and cultural sectors, tourism operators are proposed to be given a 100% income tax exemption on the value of increased income incremental from tour packages to Malaysia.
• Venture Capitalist – improvement of the existing venture capital tax incentives which may be granted for up to 10 years, a special corporate tax rate of 5% and dividend tax exemption for individual shareholders.
• Green Tech – 100% Green Investment Tax Allowance (GITA) for companies that use green technology products in their local supply chains, as certified by MyHIJAU Mark. The Green Technology Financing Scheme (GTFS) 5.0 offers a government guarantee incentive of up to 80% for green technology in the waste sector and up to 60% for other sectors such as energy, water, transportation and manufacturing.
• Food waste – Companies engaging in new food production activities are proposed to be given a 100% income tax exemption on statutory income, for a period of 10 years, meanwhile existing companies undertaking food expansion projects are given a 100% income tax exemption on statutory income, for 5 years.
• AI Tech – a tax incentive was proposed for training in Artificial Intelligence (AI) whereby a deduction of 50% to be given to Micro, Small and Medium Enterprises (MSME) on expenses incurred for AI training.
• Real Estate – For renovation and conversion of commercial buildings into residential units, it was proposed a special tax deduction of 10% to be granted. This deduction is capped at RM10 million.

Stamp Duty

Whilst in preparation of the self-assessment system for stamp duty, taxpayers should also keep in mind announcement made by Budget 2026 which includes the increase of stamp duty rate for transfer of residential property, change in threshold for the stamp duty exemption on employment contracts, and extensions to stamp duty exemptions. It was proposed, amongst others, that:

• The flat rate of stamp duty for instruments of transfer of residential property to non-citizen individuals (other than permanent residents) and foreign companies was proposed to increase to 8%, which will be applicable to instruments effecting the transfer of residential property executed from 1 January 2026 onwards.
• Exemption for employment contract below RM3,000 executed 1 January 2026 onwards.
• Exemption for instruments of transfer and loan agreements for the purchase of a first home valued up to RM500,000 will be extended until 31 December 2027.
• Exemption for insurance policies or takaful certificates for the products of “Perlindungan Tenang” will be extended until 31 December 2028.
• Exemption for insurance policies or small-value takaful certificates purchased by individuals and MSMEs is extended until 31 December 2028.

Indirect Tax

The Royal Malaysian Customs Department (RMCD) in focusing on strengthening tax compliance and aiming to reform its tax administration for sales and service tax (SST), import duty and excise duty has also made some key announcement, amongst others:

• The RMCD is focusing on enhancing its enforcement, and this includes the introduction of digital tax stamps with advanced security features to prevent counterfeiting and leakage during imports. This is supported by the Centralised Screening Complex (CSC) CCTV system to strengthen surveillance at key entry points.  
• As an initiative to strengthen the Agenda Nasional Malaysia Sihat, the increase of excise duty on cigarettes, cigars, cheroots, cigarillos and heated tobacco products starting 1 November 2025 where the increase will be in phases. Additionally, the excise duty on alcoholic beverages will also be increased by 10%, starting 1 November 2025. The exemptions on import duty and sales tax for Nicotine Replacement Therapy products will be extended until 31 December 2027, which includes products such as nicotine gum and patches, and will further expand to include nicotine mist and lozenges.
• Starting 1 January 2026, import duty, sales tax and excise duty will be imposed on vehicles imported into Langkawi or Labuan with values exceeding RM300,000. Meanwhile, full excise duty and sales tax exemptions will continue for eligible taxi and private hire vehicle owners for purchase of new Proton and Perodua vehicles.

Following the recent expansion of SST scopes earlier in June and July of this year, there was no significant changes to the SST regime announced during the Budget 2026.However, we may anticipate other initiatives by the RMCD moving forward to improve compliance and reform its administration whether through new policies or legislative amendments.

Individual Tax

Other than the updates on taxes and duties affecting the corporations and businesses, the Budget 2026 also proposed a plethora of individual tax reliefs and incentives, which include the following:

• The expansion in the scope of relief for life insurance / takaful announced in the Budget 2026 includes an income tax relief of RM3,000, expanded to cover payments of life insurance premiums / takaful contributions on policies contracted for the lives of one’s children.
• Income tax relief on expenses for vaccination by individual be expanded to cover all types of vaccines registered and approved by the Ministry of Health.
• In effort to encourage Malaysian to tour within the country in view of the “Tahun Melawat Malaysia 2026”, the government proposed a special income tax relief for individuals of up to RM1,000 for entrance fees to local tourist attractions and cultural programmes.
• Income tax relief of RM3,000 to be expanded to include daily care centres or after-school transit centres for children aged up to 12 years old.

This alert serves as a quick reference to the key highlights from Budget 2026, focusing primarily on tax and duty measures. The Budget 2026 speech contains further details, including matters not covered in this alert. In the event of any discrepancy, the Budget speech shall prevail. Please note that the proposals have not yet been gazetted and remain subject to legislative changes.

Following last week’s overview of Malaysia’s CCUS Act 2025, our second article in the CCUS Series turns the spotlight on the CCUS (Offshore Permit and Licensing) Regulations 2025, which governs the permanent storage of CO₂ in offshore areas.

Leveraging their in-depth understanding of Malaysia’s CCUS legal framework, Khoo Yu Lin and Cheng Yen of Zaid Ibrahim & Co. guide readers through and provide unique insights on:

• the lifecycle of offshore storage projects;
• key obligations of offshore operators; and
• import permit requirements for CO₂ captured outside Malaysia.