It’s tax season in Malaysia, and with it comes one of the most Googled questions of 2026: “Do I need to pay dividend tax on my ASB, EPF, or unit trust returns?”
The anxiety is understandable. Budget 2025 introduced a new 2% dividend tax on individual dividend income exceeding RM100,000 per year, a first for Malaysia after decades of tax-exempt dividend treatment.
But the confusion that followed led many Malaysians to worry their everyday savings instruments were suddenly going to be taxed too.
LHDN has now officially addressed this concern directly, and the answer is clear: your EPF dividends, ASNB distributions, LTAT returns, and unit trust income are fully excluded from the new dividend tax regime.
What did LHDN actually say?
In a statement published on 25 March 2026, the Inland Revenue Board of Malaysia (LHDN) clarified which distributions fall outside the scope of the new 2% dividend tax.
The board was responding to growing confusion among taxpayers who were unsure whether returns from government-backed savings funds would be caught under the new rules.
Such payments do not fall under the Statutory Income from Dividends Derived from Malaysia (Pendapatan Berkanun Dividen Punca Malaysia) section.
They are therefore not required to be declared and will not be taken into account in determining whether the RM100,000 threshold has been exceeded,” LHDN told The Star.
This means that even if you earned RM50,000 from your ASB dividends and another RM60,000 from EPF this year, those amounts do not push you toward the RM100,000 taxable threshold.
They are treated as entirely separate categories of income.
So what exactly is exempt?
LHDN confirmed that the following distributions are not considered taxable dividend income under the new rules:
Exempt from dividend tax
- EPF (KWSP) dividends — Simpanan Konvensional & Shariah
- ASNB fund distributions (ASB, ASB2, ASM, ASN, ASN Equity series)
- LTAT (Armed Forces Fund Board) distributions
- Unit trust fund distributions under PNB
- Dividends from companies with Pioneer Status
- Foreign-sourced dividends (exempt until YA 2036)
- Closed-end fund distributions
Subject to 2% tax if exceeding RM100k
- Dividends from Malaysian resident companies (shares on Bursa Malaysia)
- Dividends from private limited companies (Sdn Bhd)
- Dividends held via nominee arrangements
- LLP profit distributions (effective YA 2026)
In short: the 2% dividend tax is specifically targeted at company shareholders — people receiving dividends from their direct shareholdings in Malaysian companies. It was never intended to affect everyday Malaysians saving through EPF, ASB, or unit trusts.
How does the 2% dividend tax actually work?
For those who do hold shares in Malaysian companies and receive dividends, here is how the tax calculation works under the new rules that took effect from 1 January 2025 (Year of Assessment 2025).
Example: How the 2% dividend tax is calculated:
- Total dividend income from company shares: RM120,000
- Tax-free threshold: (RM100,000)
- Chargeable dividend income: RM20,000
Tax rate applied2%
Total dividend tax payable: RM400
The 2% only applies to the portion above RM100,000.
It is not applied to your entire dividend income.
So if you receive RM95,000 in dividends from company shares, you pay zero dividend tax.
LHDN also clarified that the RM100,000 threshold applies broadly — including dividends received through nominee arrangements.
This targets situations where high-net-worth individuals hold shares indirectly through a third party to obscure income.
What about Robo-Advisors like StashAway, Wahed & Raiz?
Good news here too. Robo-advisory platforms in Malaysia invest through unit trust structures, which means the tax treatment at the fund level is already handled before distributions reach you.
Returns from these platforms are treated the same as unit trust distributions and are not subject to the new dividend tax for individual investors.
