On 31 July 2025, LHDN issued Public Ruling No. 2/2025, the most complete guide on group relief to date, combining almost 20 years of changes.

Group relief, introduced in 2006, allows a loss-making company to transfer part of its current year losses to a related profitable company — reducing tax and keeping more cash in the group.

Key milestones:

2006: 50% surrender limit, strict eligibility (RM2.5m paid-up capital, 70% shareholding).
2011: Limit raised to 70%
2016: Introduced two-tier tests to ensure genuine group relationships.
2018: New companies limited to 3 consecutive years of relief, with transitional rules phasing out older companies.

Today’s framework (2025):

70% limit remains.
Stricter definitions on operations, residual assets, and loans.
Both companies must be Malaysian-incorporated, resident, and meet shareholding tests for current and prior 12 months.
Election in Form C is irrevocable and penalties apply for errors.

SME takeaway

The 3-year limit means early planning is essential. Structure your group, forecast results, and keep proper records. Group relief is a short-term tool, not a permanent tax shield.

Read the full content in our blog
https://lnkd.in/gX-Twfu3