Corporate Tax Deductions Malaysia 2026 — What You Can Claim

Knowing what expenses are deductible can significantly reduce your company's tax liability. This guide covers allowable deductions, double deductions, and common mistakes that trigger LHDN audits.

Fully Deductible Business Expenses

• Staff salaries, EPF, SOCSO, EIS contributions
• Rental of business premises
• Utilities (electricity, water, internet) for business use
• Professional fees (audit, accounting, legal — business related)
• Insurance premiums (fire, theft, liability)
• Repairs and maintenance (revenue nature, not capital)
• Marketing and advertising expenses
• Travel expenses (business purpose, properly documented)
• Bad debts (specific provision, written off)
• Interest on business loans

Double Deductions (200% claim)

• R&D expenditure (approved by MOSTI)
• Training expenses (HRDF approved)
• Export promotion (trade fairs, overseas marketing)
• Hiring disabled persons (OKU)
• Green technology equipment
• Internship programme (structured)

Non-Deductible (Add-Backs)

• Entertainment (50% restricted, except for staff/marketing events)
• Personal expenses of directors
• Donations (unless to approved institutions)
• Capital expenditure (claim via capital allowance instead)
• Fines and penalties
• Private vehicle expenses (restricted to business portion)
• Provisions (general provisions not allowed)

Common Audit Triggers

• Claiming 100% entertainment without proper records
• Director personal expenses mixed with company
• No supporting documents for travel claims
• Claiming capital items as revenue expense
• Inconsistent treatment year-to-year