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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).
1️⃣ Employee-Related Expenses
2️⃣ Client & Supplier Expenses
3️⃣ 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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