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Chinese New Year is a time for appreciation, celebration and strengthening business relationships but for companies, it also raises an important question:
Which CNY expenses are tax-deductible under Malaysian tax law?
Here’s a clear breakdown based on current Income Tax Act rules (YA 2025).
1⃣ Employee-Related Expenses
2⃣ Client & Supplier Expenses
3⃣ Other Celebration Costs
Key Principle: Section 33(1) – Wholly & Exclusively Incurred
Under Malaysian tax law, expenses are deductible only if they are:
Wholly and exclusively incurred in the production of income
Supported by proper documentation
Properly classified
Misclassification (promotion vs entertainment) can affect deductibility.
Chinese New Year spending can be both meaningful and tax-efficient but only if structured properly.
Before you finalize your CNY budget, ask:
- Is this staff welfare or entertainment?
- Is it promotional or celebratory?
- Is it properly documented?
Proper planning can protect your deductions and avoid unnecessary tax exposure.
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