Small and Medium Enterprises (SMEs) form the backbone of Malaysia’s economy, and the government continues to offer attractive tax incentives to support their growth, innovation, and sustainability. Here are some of the most valuable tax benefits SMEs should leverage in 2025:
SME Tax Rebate for New Businesses
Newly incorporated SMEs between 2023 and 2025 can claim a tax rebate of up to RM20,000 per year for 3 consecutive years. This rebate helps reduce the initial tax burden, allowing startups to reinvest savings into business expansion and operations.
Green Income Tax Exemption (GITE)
SMEs involved in green technology or environmentally friendly services/products qualify for up to 100% exemption on income derived from green activities. This incentive encourages sustainable business practices and innovation in areas like renewable energy, waste management, and energy efficiency.
Export Incentives
For SMEs looking to grow their market beyond Malaysia, export incentives provide tax exemptions or reduced tax rates on income from increased exports. This support makes it more financially viable to enter and compete in international markets.
Accelerated Capital Allowance (ACA)
SMEs investing in digital tools, machinery, or equipment can benefit from accelerated depreciation—allowing them to write off capital expenditures faster and reduce taxable income sooner.
Why SMEs Should Act Now
These incentives are designed not only to ease tax liabilities but also to encourage modernization, sustainability, and global competitiveness. By proactively applying for these exemptions and rebates, SMEs can significantly improve cash flow, reduce costs, and accelerate growth.