The Inland Revenue Board of Malaysia has introduced a 10-year limit for the tax-exempt status granted to non-profit organisations that are eligible to receive tax-deductible donations. The change applies to institutions, organisations, and funds approved under Section 44(6) of the Income Tax Act 1967. These include charities, welfare groups, religious bodies, education funds, and community service organisations.
New 10-Year Limit Now In Effect
The 10-year limit took effect on 27 November 2025. The Inland Revenue Board will issue updated notification letters to organisations whose current approvals end on 31 December 2025. These letters will clarify how the new limit applies to each organisation.
Approvals granted before 27 November 2025 will remain valid for the duration already stated, and the new limit will only apply once the existing approval period expires.
Ongoing Compliance Requirements
The Inland Revenue Board stated that compliance audits will continue throughout the approval period. Organisations must follow all conditions attached to their tax-exempt status. If they fail to comply, the approval may be revoked. Once revoked, any income earned by the organisation may be taxed under Schedule 6 of the Income Tax Act.
Impact On Non-Profit Organisations
The introduction of a fixed approval duration provides organisations with a clearer timeline for renewal and long-term planning. It also highlights the importance of maintaining proper governance and reporting practices to meet the Inland Revenue Board’s standards under Section 44(6) of the Act.
Non-profit organisations that rely on tax-deductible donations may wish to review their internal processes to ensure they remain eligible throughout the approval period.
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