New Small Value Asset Allowance Rules: What PR 4/2026 Changes

LHDN has issued Public Ruling No. 4/2026 on the special allowance for small value assets, dated 30 September 2026, replacing the 2021 ruling. The basic rule stays the same. Assets costing not more than RM2,000 each can be claimed in full at 100%. A micro, small and medium company, or Syarikat Mikro, Kecil dan Sederhana (SMKS), can claim without any limit, while companies that are not SMKS and LLPs are capped at RM20,000 a year, with the excess going to normal capital allowance.

The main change is how a company qualifies as an SMKS. Instead of setting out its own test, the ruling now refers to Public Ruling No. 8/2025. Under that ruling, a company must be resident and incorporated in Malaysia, have paid up ordinary share capital of not more than RM2.5 million at the beginning of the basis period, and have gross income from business sources of not more than RM50 million. It also must not be more than 50% owned, directly or indirectly, by a related company, meaning a company with paid up ordinary share capital above RM2.5 million.

The ruling also mentions an ownership condition that has applied since YA 2024. If more than 20% of a company's paid up ordinary share capital is owned directly or indirectly by a foreign company or by an individual who is not a Malaysian citizen, the company cannot claim without limit. This applies even where the foreign company is only a holding company and the ultimate owners are Malaysians.

A company that is still carrying on its business but has no business income because of current losses, or because operations have temporarily stopped, is not excluded from SMKS treatment.

Two other points are now stated clearly. An LLP is always capped at RM20,000, and records of these small value assets must be kept separately from other capital allowance assets for 7 years.

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