Malaysia has reversed some of the restrictive tax policies introduced over the past few years, improving conditions for foreign residents and investors.
• The Malaysia My Second Home (MM2H) program has reopened, restoring access to long-term residency options. • Previous taxation on foreign-sourced income for individuals has been suspended through 2026, meaning dividends and other foreign income remain untaxed locally. • A 3% tax rate for Labuan entities has been clarified and reaffirmed, providing certainty for businesses and investors using Labuan structures. • MM2H reforms remain limited; some elements have not fully progressed, and certain retroactive measures from prior years still affect planning. • The changes depend on government stability and policy enforcement, so future adjustments could occur.
Takeaway: Malaysia is now more attractive for part-year residents and international investors, with no tax on foreign income until 2026 and favorable Labuan entity rules, though MM2H and other programs remain partially uncertain.
