Small Value Assets Allowance Malaysia: RM2,000 Rule for SMEs

The small value assets allowance in Malaysia lets a company claim 100% tax allowance on a business asset that costs RM2,000 or less. This guide is for SME owners who buy laptops, phones, printers or office furniture, and want to know who can claim, what the limits are and which records to keep.

The rules come from Inland Revenue Board of Malaysia (LHDN) Public Ruling No. 4/2026, published on 30 September 2026. It replaces Public Ruling No. 3/2021. Tax rules can change, so check with LHDN before you file.

Key Takeaways

• Each asset must cost RM2,000 or less to qualify.
• The allowance is 100% of the cost, claimed under paragraph 19A of Schedule 3 of the Income Tax Act 1967.
• A Micro, Small and Medium Company (MSMC) has no yearly limit on the total claim.
• A company that is not an MSMC, and a Limited Liability Partnership (LLP), can claim up to RM20,000 in each year of assessment.
• Assets bought on hire purchase and assets with a very short life do not qualify.
• Keep your asset records for seven years.

How the Small Value Assets Allowance in Malaysia Works

A small value asset is an asset used in your business that costs not more than RM2,000 each. The cost of the assets that qualify is called qualifying plant expenditure (QPE). You claim 100% of the QPE as a special allowance, instead of the normal capital allowance rates. The claim is made in the tax return for the year of assessment (YA), which is the tax year.

You can choose between the special allowance and the normal capital allowance. If you choose normal capital allowance, you must keep using it until that QPE is fully claimed. If you claim the special allowance, you cannot also claim normal capital allowance on the same assets.

Who Counts as an MSMC?

LHDN explains the MSMC tests in Public Ruling No. 8/2025, published on 22 December 2025. In short, the company must pass all of these tests:

• It is resident in Malaysia and incorporated in Malaysia.
• Its paid-up ordinary share capital is not more than RM2.5 million at the start of the basis period.
• Its gross income from business is not more than RM50 million in the basis period.
• It passes the related-company ownership tests in the ruling.
• From YA 2024, not more than 20% of its shares are owned, directly or indirectly, by a foreign company or by an individual who is not a Malaysian citizen.

The special allowance does not apply to some companies, such as an investment holding company that is not listed on Bursa Malaysia, or a company with no business gross income. A dormant company with no business income is also excluded.

Assets That Do Not Qualify

• Assets that cost more than RM2,000 each. Use normal capital allowance for these.
• Assets bought on hire purchase. Use normal capital allowance for these too.
• Assets with a very short life, about two years or less. LHDN's example treats a crockery set that is replaced often as short life.
• Any amount above the RM20,000 yearly limit, if your company is not an MSMC. The extra goes to normal capital allowance.

Worked Example from LHDN

Public Ruling No. 4/2026 shows a restaurant company with assets worth RM26,050. The convection oven costs RM3,000, which is over the RM2,000 limit. The crockery set costs RM2,000 but has a short life. After removing both, the QPE is RM21,050. The same facts give different results for an MSMC and a company that is not an MSMC.

The company that is not an MSMC must move the RM1,800 microwave to normal capital allowance, because the QPE is over RM20,000. Your own numbers will be different, so use this only to understand the steps.

Selling or Scrapping a Small Value Asset

If you sell the asset for more than its residual expenditure (the cost not yet claimed), LHDN can charge you a balancing charge. After a full 100% claim, the residual expenditure is nil. In the ruling, an asset of RM1,300 sold for RM800 gives a balancing charge of RM800. The charge cannot be more than the allowances you claimed. If the asset is obsolete or damaged and cannot be sold or repaired, its market value is treated as zero.

Small Value Assets Allowance Checklist

• List every asset with its date, cost and business use.
• Remove assets over RM2,000, hire purchase assets and very short-life assets.
• Test your company against the MSMC rules in Public Ruling No. 8/2025.
• If you are not an MSMC, or you are an LLP, stop the special allowance at RM20,000 and move the rest to normal capital allowance.
• Keep two asset lists, one for each type of allowance, for seven years from the end of the YA in which you file the return.

Conclusion

The allowance is simple to use if you sort your assets first. For more ideas, read our guide to the top 5 tax deductions for businesses, see how the estimate of tax payable works, learn about the Budget 2027 SME tax rate cut and check how Form C is filed.

How Conzlab can help: Conzlab gives business compliance consultancy and company secretary support, including a check of your company records and filing dates. Contact Conzlab to talk about your needs, and we can refer you to a tax agent for your tax computation.

Official Sources

• LHDN Public Ruling No. 4/2026: Special Allowances for Small Value Assets
• LHDN Public Ruling No. 8/2025: Tax Treatment for Micro, Small and Medium Companies
• LHDN SME page

Last updated: 12 November 2026. This article is general information, not tax or legal advice. Rules can change, so check with the agency before you act.

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