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A new gazette published on 16 June 2026 gives employers a tax incentive for putting flexible work arrangements in place. Under the Income Tax (Deduction for the Costs of Implementation of Flexible Work Arrangements) Rules 2026, employers can claim a 50% additional tax deduction on qualifying expenditure related to flexible work implementation, and this applies from the year of assessment 2025.

The deduction covers two categories of spending: capacity development costs and software acquisition costs. Capacity development includes training course fees, internal trainer fees, training materials, rental of training space, examination fees, and travel costs for employees and trainers attending the training. Accommodation is capped at RM300 per day, and meal expenses at RM150 per day.

The total expenditure eligible for this deduction is capped at RM500,000, and the deduction can only be claimed once. This deduction is on top of any deduction already allowed under Section 33 of the Income Tax Act 1967, meaning it does not replace your existing expense deductions.

For flexible work, the gazette defines this as arrangements relating to place of work, scheduling of working hours, or the number of hours worked. To qualify, the implementation must be verified by Talent Corporation Malaysia Berhad, and the employer's application must have been received by TalentCorp on or after 1 January 2025 but no later than 31 December 2027.

Employers who have already claimed under earlier rules, specifically P.U. (A) 134/2015 or P.U. (A) 377/2021, are not eligible under this new gazette.

If your company is moving towards flexible work and you want to make sure the spending is structured correctly to support a tax deduction, feel free to reach out via WhatsApp at 010-246 2151.

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Most business owners write off a bad debt, take the loss, and move on. What they do not realise is that the SST they already remitted to Customs on that same sale is recoverable. That is a separate chunk of money sitting unclaimed, and Customs has just updated its official guideline on 15 Jun 2026 confirming exactly how to get it back.

Jabatan Kastam Diraja Malaysia recently published a new version of its SST Refund and Drawback Guide covering multiple recovery scenarios. The bad debt refund is one of them, and it is the one most businesses never act on.

One thing worth highlighting upfront: this applies even if your business has since deregistered from SST. The right to claim does not disappear just because you are no longer a registered manufacturer or registered person.

The window is 𝐬𝐢𝐱 𝐲𝐞𝐚𝐫𝐬 from the date you paid the tax to Customs. Here is what you need to do:

1. Write off the debt formally in your accounts and document every recovery attempt, including registered reminder letters and a formal legal demand through a lawyer. The key is showing that payment genuinely cannot be recovered.

2. Calculate your claim. If your customer paid nothing, you recover the full tax amount. If they paid partially, the recoverable tax is proportionate. For example, if your customer paid RM6,000 out of a RM10,000 invoice that included RM500 of Service Tax, you can only recover the RM300 that corresponds to the unpaid RM4,000 portion.

3. Compile your documents: application letter, Borang JKDM No. 2, computation statement, sales invoices, debtor ledger, aging report, proof of collection efforts, proof of write-off, official payment receipt, letter of authorisation if filing through an agent, and your bank account details.

4. Submit to the Hasil Accounting Branch at the Customs Technical Services Division in the state where your business operates.

Six years feels long. But old debts get messy, documents go missing, and staff who handled those transactions move on. If you have outstanding bad debts from the past few years, now is the right time to check whether there is recoverable SST sitting in there.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, payroll, tax planning and compliance matters for you. Feel free to WhatsApp us at 010-246 2151.

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Today's sharing is a little different from our usual tax and compliance updates. This one is personal. I know someone who have been scammed, and the heartbreaking part is not just losing the money to fraudsters, but walking away with nothing after approaching the bank as well. I am sharing this because I genuinely hope more people get to see it, and equally, I hope it reaches those in the banking industry who have the power to do more.

𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞
The deceased was an 85-year-old CIMB Preferred Customer of 30 years with a simple transaction profile of cheques and JomPay payments. Between 24 June and 7 July 2022, scammers impersonating police officers deceived him into handing over his debit card and PIN, and proceeded to drain RM529,774.79 from his account over 14 consecutive days at approximately RM40,000.00 per day. He passed away thereafter and his estate brought the claim against CIMB for negligence and breach of banking duty.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐀𝐩𝐩𝐞𝐥𝐥𝐚𝐧𝐭
The estate argued that CIMB was obliged under the Quincecare duty, recognised in Malaysian law, to pause and investigate when transactions show reasonable grounds for suspicion. Fourteen consecutive days of maximum daily withdrawals from a 30-year customer who had never used ATM or MEPS heavily was a clear red flag. CIMB's own witness admitted the bank had fraud detection systems, was trained on BNM guidelines, and yet made no call, sent no SMS alert, and took no action throughout the entire 14-day period.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐑𝐞𝐬𝐩𝐨𝐧𝐝𝐞𝐧𝐭
CIMB argued that the transactions were validly authorised using the deceased's own card and PIN, and that his voluntary act of surrendering his credentials broke the chain of causation. The bank also relied on a UK Supreme Court decision to argue that the Quincecare duty does not apply where the customer himself hands over his credentials.

𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐂𝐨𝐮𝐫𝐭
The High Court found in favour of the Plaintiff. The deceased never personally instructed CIMB to make payments, it was the scammers who used the card and PIN directly. After the third day, a detectable pattern had emerged and the bank had the tools, authority, and opportunity to intervene. It did nothing. Liability was apportioned at 40% to the deceased and 60% to CIMB, with judgment entered for RM317,864.87 together with interest at 5% per annum and costs of RM100,000.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, payroll, tax planning and compliance matters for you. Feel free to WhatsApp us at 010-246 2151.

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Many business owners in Malaysia treat the company account as a personal float. Need cash? Take a director's loan. It feels harmless because the money stays within the family. But under Malaysian tax law, this quietly creates a real tax bill for your company every single month, even if no interest was ever charged or paid.

Under Section 140B of the Income Tax Act 1967, the moment a company advances money from its internal funds to a director who holds a management or directorship role in the company and controls at least 20% of its ordinary share capital, the company is treated as having earned interest income on that loan. Internal funds include capital injections, retained earnings, and company reserves. LHDN does not wait for real income to exist. It calculates a deemed interest amount and taxes the company on it regardless.

The calculation is straightforward. Every month, LHDN takes the outstanding loan balance, multiplies it by Bank Negara's Average Lending Rate, and divides by 12. This runs every single month for as long as the loan remains outstanding. The deemed interest income is then assessed under paragraph 4(c) of the ITA as interest income of the company.

The only way to stop this from applying is to charge the director interest at a rate equal to or above Bank Negara's Average Lending Rate for that month. If the rate charged falls below that benchmark, the law disregards the interest charged entirely and the full deemed amount still applies. Where no interest is charged at all, the entire deemed interest computed under the formula is brought to tax.

There is also a less obvious trap for dormant companies. Under the Public Ruling, if a dormant company makes a loan or advance to a director, it is treated as having commenced operations. Section 140B still applies, and the deemed interest income is assessed in the same way as for an active company.

Beyond income tax, the Companies Act 2016 adds a separate layer of risk. Section 224 prohibits most companies from making loans to their own directors unless specific prior approvals are in place. Exempt private companies are excluded from this restriction, but for companies that do not qualify, any director who authorises such a loan without the required approvals commits a criminal offence carrying up to five years imprisonment or a fine of up to RM3 million.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, payroll, tax planning and compliance matters for you. Feel free to WhatsApp us at 010-246 2151.

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Yesterday we shared how the Hire-Purchase (Amendment) Act 2025 replaces the old flat rate system with the Effective Interest Rate on a reducing balance. Today we want to go one step further. Knowing the law has changed is one thing. Knowing what to do about it is another.

𝐃𝐨𝐞𝐬 𝐭𝐡𝐢𝐬 𝐦𝐞𝐚𝐧 𝐲𝐨𝐮𝐫 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐩𝐚𝐲𝐬 𝐥𝐞𝐬𝐬 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭?
Not automatically. The EIR reflects the true financing cost, but the Act does not prescribe what rate a lender must offer. Lenders may reprice their products under the new framework. What changes is transparency and calculation methodology. Before signing any new hire purchase agreement, require your financier to disclose the EIR in writing. The EIR is now the standardised measure of financing cost across all hire purchase providers. Use it to compare offers from different financiers on a like-for-like basis before committing.

𝐃𝐨𝐞𝐬 𝐞𝐚𝐫𝐥𝐲 𝐬𝐞𝐭𝐭𝐥𝐞𝐦𝐞𝐧𝐭 𝐧𝐨𝐰 𝐦𝐚𝐤𝐞 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐬𝐞𝐧𝐬𝐞 𝐟𝐨𝐫 𝐲𝐨𝐮𝐫 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬?
Under the old flat rate system, settling a hire purchase loan early offered limited savings because interest was already front-loaded into the agreement. Under the reducing balance method, your remaining interest obligation is based only on the outstanding principal at the time of settlement. Early settlement now has a direct and measurable impact on your total financing cost in a way the old system did not allow. The Act also provides that for existing hire purchase agreements already in force, a business and its financier may mutually agree to apply the new calculation method for the purpose of determining the net balance due on early settlement.

𝐖𝐡𝐚𝐭 𝐡𝐚𝐩𝐩𝐞𝐧𝐬 𝐢𝐟 𝐲𝐨𝐮𝐫 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐞𝐫 𝐫𝐞𝐯𝐢𝐬𝐞𝐬 𝐭𝐡𝐞 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐫𝐚𝐭𝐞 𝐦𝐢𝐝-𝐚𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭?
The Act now requires the owner to serve written notice on your business at least 14 days before any revision to the effective interest rate takes effect. The notice must specify the revised rate and the corresponding change to instalment amounts or number of instalments. Failure to provide this notice is an offence under the Act. This protects your business from sudden changes to your repayment obligations without adequate warning.

𝐖𝐡𝐚𝐭 𝐬𝐡𝐨𝐮𝐥𝐝 𝐲𝐨𝐮𝐫 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐯𝐞𝐫𝐢𝐟𝐲 𝐰𝐢𝐭𝐡 𝐲𝐨𝐮𝐫 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐞𝐫?
Ask what EIR applies to your next hire purchase agreement and compare it across multiple financiers before signing. If you have existing agreements, ask whether your financier is willing to apply the new early settlement calculation under the transitional provisions. Confirm that any future rate revisions will come with the required 14-day written notice.

Our CFO advisory team helps businesses stay ahead of regulatory changes without disruption. Reach us on WhatsApp at 010-246 2151.

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If your business finances vehicles, machinery or equipment under hire purchase, there is a legal change you need to know about. Over the next two days we will be breaking this down for you, starting with what has actually changed and why it matters.

Every time your business signs a hire purchase agreement to finance a vehicle, machinery or equipment, the total interest cost is locked in from day one. Under the old flat rate system, that interest was calculated on the full original loan amount for the entire tenure, regardless of how much principal your business had already paid down.

The Hire-Purchase (Amendment) Act 2025 ends this. The flat rate method has been replaced with the Effective Interest Rate calculated on a reducing balance. Interest is now charged only on the outstanding principal at each point in the agreement. As your business services the loan and the principal reduces, so does the base on which interest is computed.

The Act also mandates full disclosure. Before your business signs any new hire purchase agreement, the financier is required to state the EIR clearly in the agreement documentation. This gives your finance team a standardised, comparable figure to evaluate financing offers across different providers rather than relying on headline instalment amounts that obscure the true cost.

For variable rate agreements, the reference rate anchored to Bank Negara Malaysia's prevailing overnight policy rate now serves as the pricing benchmark. The old references to base lending rate and statutory rebate have been removed from the Act entirely.

Tomorrow we will walk you through the practical questions your business should be asking your financier before your next hire purchase agreement.

Our CFO advisory team helps businesses stay ahead of regulatory changes without disruption. Reach us on WhatsApp at 010-246 2151.

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The Royal Malaysian Customs Department has released an updated guide on service tax for motor vehicle service or repair, dated 10 June 2026. This replaces the earlier 2021 version and brings important changes that workshop owners and vehicle repair operators should pay attention to.

One major update relates to branches operating in Designated Areas like Langkawi, Labuan, Tioman and Pangkor. Tax treatment is now based on where the registered person's principal place of business is located, not where the branch operates. So if your workshop is registered in Kedah and has a branch in Langkawi, repair services provided by that Langkawi branch are now subject to service tax. The location of the head office determines the tax treatment, regardless of where the actual service takes place.

Alongside this, the guide adds clearer rules on Special Areas, such as free zones and licensed warehouses, explaining how service tax applies when services are provided between Special Areas and Designated Areas. This gives more clarity for businesses operating across these different zones.

The guide also provides a clearer example on how free servicing arrangements should be billed and taxed. Take a customer who buys a car from a dealership, where the purchase price already includes one year of free servicing at any authorised service centre. When the customer brings the car in for servicing, the centre does not charge the customer directly, since this cost has already been absorbed into the original sale price. Instead, the service centre bills the dealership for the servicing cost, and this amount is subject to service tax. In other words, even when a customer pays nothing out of pocket, service tax still applies to the transaction between the service centre and the dealership.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, payroll, tax planning and compliance matters for you. Feel free to WhatsApp us at 010-246 2151.

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JKDM has released an updated guide for completing the SST-02 return, effective 31 May 2026, replacing the version issued on 10 September 2025. The guide walks through how to access and complete the manual SST-02 form, covering registration details, sales and service information, tax calculation, exemptions, and the declaration section.

A few points are worth keeping in mind when filling in the form.

Only one SST registration number is allowed per submission, so if your company holds more than one SST registration, a separate SST-02 is needed for each. The form must be typed in block letters, and any field with no value should be filled with "0" rather than left blank.

Deductions are another area to pay attention to, as there are a few different types and each comes with its own condition. Credit notes for service tax already declared in a previous period can only be offset in the next taxable period, not the period the credit note was issued.

Aside from credit notes, any other service tax deduction must first be approved by the Director General under Section 39 of the Service Tax Act 2018 before it can be claimed. Bad debt relief follows the same principle, it is only claimable once the application has been formally approved.

For the full guideline, you may download a copy here: https://august.short.gy/BO

Our CFO advisory team helps businesses stay ahead of regulatory changes without disruption. Reach us on WhatsApp at 010-246 2151.

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A new gazette order gazetted on 9 June 2026 offers a meaningful income tax incentive for women who left the workforce and are now returning to employment. If your company has recently hired, or is considering hiring, such a candidate, this is worth understanding.

Under P.U. (A) 215, a qualifying woman is fully exempt from income tax on her employment income for up to twelve consecutive months. The exemption applies from Year of Assessment 2024 to Year of Assessment 2028.

To qualify, the woman must be a Malaysian citizen, resident in Malaysia, and must have been out of employment for at least 24 consecutive months on or after 28 October 2017. She must also have had at least three years of full-time work experience before she stopped working, be below 58 years of age at the point of application, and earn at least RM5,000 gross per month under the new contract. The employment contract must be for at least 24 months, signed within the period 1 January 2023 to 31 December 2028.

There are restrictions on who counts as an eligible employer. Companies directly or indirectly controlled by the woman herself, sole proprietorships, and businesses employing her through close family members do not qualify.

The application must be made to the Minister through Talent Corporation Malaysia Berhad, from 1 January 2024 to 31 December 2027. The exemption does not remove the filing obligation. The individual is still required to submit her tax return as usual.

Our CFO advisory team helps businesses stay ahead of regulatory changes without disruption. Reach us on WhatsApp at 010-246 2151.

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Earlier we talked about how Section 4(3) of the Stamp Act 1949 offers less protection than most businesses assume, and how the two limits built into that provision can leave a document fully exposed to ad valorem stamp duty. Today we share a real court case that shows exactly what happens when a taxpayer tries to rely on Section 4(3) and fails. The price tag was over RM1.4 million.

𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞
CIMB Bank Berhad and AirAsia Berhad had an ISDA Master Agreement governing derivative transactions between them. Because the ISDA contained no ascertainable payment sum at the time of signing, it was stamped at a fixed duty of RM10.00. Over time, various amounts became due and payable by AirAsia to CIMB under those transactions. AirAsia failed to settle the outstanding amounts and requested a restructuring. On 18 December 2020, the parties entered into a Settlement Agreement under which the outstanding amounts were to be amortised and paid over a series of fixed instalments. The Collector of Stamp Duty assessed ad valorem stamp duty of RM1,337,565.00 and a late stamping penalty of RM66,878.25 on the Settlement Agreement. The central issue was whether the Settlement Agreement was a subsidiary instrument under Section 4(3), attracting only RM10.00, or a standalone principal instrument subject to full duty under Item 22(1)(a) of the First Schedule.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐓𝐚𝐱𝐩𝐚𝐲𝐞𝐫
CIMB argued the Settlement Agreement was subsidiary to the ISDA and should attract only RM10.00 under Section 4(3). CIMB further argued the Settlement Agreement did not fall within Item 22 or Item 27 of the First Schedule. CIMB also relied on a 1999 Association of Banks in Malaysia letter stating that ISDA-related documents should be stamped at RM10.00 under Item 4. As a last resort, CIMB argued that Item 27(a)(ii) should apply as the Settlement Agreement was denominated in foreign currency.

𝐏𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐒𝐭𝐚𝐦𝐩 𝐃𝐮𝐭𝐲 𝐂𝐨𝐥𝐥𝐞𝐜𝐭𝐨𝐫
The Collector argued Section 4(3) only covers six transaction types: sale, lease, charge, settlement, exchange and partition. The ISDA fell within none of these. The word "settlement" in Section 4(3) refers to a disposition of property such as a trust, not a commercial debt restructuring. Even if Section 4(3) applied, the Settlement Agreement created an entirely new and independent payment obligation and could not be treated as a subsidiary instrument. It fell squarely within Item 22(1)(a) as an instrument of any kind whatsoever serving as the principal security for sums payable at stated periods with an ascertainable total sum. The Association of Banks in Malaysia letter had no force of law and could not override the statutory provisions of the Act.

𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐂𝐨𝐮𝐫𝐭
The Court of Appeal unanimously dismissed CIMB's appeal with costs of RM20,000.00 to the Collector. Section 4(3) did not apply as the Settlement Agreement fell outside all six categories in that provision. Even if it did, the Settlement Agreement independently created a new payment obligation and could not be a subsidiary instrument. Item 22(1)(a) applied as the Settlement Agreement satisfied the definition of a bond and fell within the broad phrase "instrument of any kind whatsoever." The Association of Banks in Malaysia letter carried no legal authority. Total liability upheld was RM1,337,565.00 in stamp duty and RM66,878.25 in late stamping penalty.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, payroll, tax planning and compliance matters for you. Feel free to WhatsApp us at 010-246 2151.

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