Donation Tax Relief in Malaysia: How to Give & Save on Taxes (2025)?

Donation tax relief in Malaysia lets taxpayers reduce their chargeable income by donating to LHDN-approved charities. Gifts are deductible up to 10% of aggregate income; donors must keep official receipts or e-Invoices and donate to approved organisations to qualify properly.

What is Tax Relief for Donations in Malaysia?

Tax relief for donations means you can deduct eligible donations from your aggregate income when calculating your chargeable income under the Income Tax Act 1967.

The main legal provision for charitable donations is Subsection 44(6) of the Income Tax Act, this is the clause LHDN uses when approving institutions or organisations whose receipts qualify donors for tax relief.

In short: donate to an LHDN-approved organisation and you can claim a deduction on your tax return (subject to limits).

How Do Donation Tax Deductions Work?

The mechanics (simple)

• Donations to approved institutions are treated as deductions from aggregate income. That lowers your chargeable income, which in turn reduces the tax you pay.
  

• Most cash donations to approved organisations are deductible up to 10% of your aggregate income in the assessment year, that’s the common rule applied by LHDN.

Government gifts & special categories

LHDN also recognises gifts to government bodies, certain national-interest projects, approved sports bodies, and specific in-kind contributions under separate subsections (some have their own caps or special rules). Always check the relevant subsection and guidance before assuming a category is covered.

Worked Example of Donation Deduction (2025)

Scenario: Aggregate income = RM100,000. Donation made = RM5,000 to an LHDN-approved charity.

1. Maximum deductible (10% rule) = 10% × RM100,000 = RM10,000.

2. Donation amount (RM5,000) ≤ cap (RM10,000) → full deduction allowed.

3. New chargeable income = RM100,000 − RM5,000 = RM95,000.

4. Tax saving = marginal tax rate × RM5,000 (actual ringgit saved depends on your tax bracket).

Key point: the deduction lowers chargeable income, not your tax directly.

The cash saving equals the donation × your marginal tax rate. For exact tax payable differences, plug chargeable incomes into the Malaysia tax table when filing.

Who Can Claim: Individuals vs Companies

Both individuals (tax residents and certain non-residents depending on rules) and companies can claim donation deductions, but filing rules and forms differ.

• Individuals: Claim donations on personal income tax returns (Form BE for employment income only, Form B for business income). Deadlines and e-filing rules are published by LHDN.
  

• Companies: Claim business-related charitable deductions on corporate returns (Form C). Companies should verify whether a donation is deductible as a business expense or as a special donation under subsections like 44(6).
  

Comparison Table: Individuals vs Companies

Criteria	Individuals	Companies
Eligible donors	Tax residents and eligible non-residents	Registered Malaysian companies
Claim location	Form BE / B (personal return)	Form C (company return)
Limit	Generally 10% of aggregate income	Often 10% cap applies for donation claims; different tests if treated as business expense
Receipt needed	Official receipt / e-Invoice	Official receipt / e-Invoice
Record keeping	Keep documents 7 years	Keep documents 7 years (or as required)

Which Organisations Qualify for Tax Relief?

Only organisations or institutions approved by the Director General of LHDN can issue receipts that qualify the donor for tax relief under Subsection 44(6).

LHDN publishes guidance and a maintained list of approved institutions, the official guidelines explain the approval process and criteria.

If in doubt, ask the charity to show its approval reference or check LHDN’s published list (PDF).

• Where to check: LHDN’s official guidance page and the “List of Guidelines Under Subsection 44(6)” (PDF) are the authoritative sources. Always use LHDN material when validating an NGO.

Popular LHDN-Approved NGOs (2025)

Below are commonly known organisations that publish their LHDN approval on their websites, donors should still verify the current approval period before donating:

• UNICEF Malaysia, confirms tax-deductible receipts for qualifying donations (check their donor pages).

• WWF-Malaysia, states it is approved under Subsection 44(6) for cash donations.

• National Cancer Society Malaysia (NCSM), issues tax-deductible receipts for donations above threshold amounts.

• MERCY Malaysia, shows LHDN reference and approval periods on donation pages.

• Generasi Gemilang (Yayasan Generasi Gemilang), states tax-exempt status under Subsection 44(6) and guidance for receipts.

What Donations Are Not Deductible?

• Anonymous gifts without donor details or proper receipts.

• Most in-kind donations (food, clothes, goods) unless specifically allowed or valued and accepted under a relevant subsection. LHDN guidance clarifies what in-kind contributions qualify.

• Donations to foreign NGOs that lack LHDN approval (unless routed through an approved Malaysian entity).

• Crowdfunded payments without formal receipts or where donors get significant non-charitable benefit.

Always get an official receipt (or e-Invoice) showing the organisation’s approval reference.

How Much Can We Deduct from Donations?

• General rule: donations to approved organisations are deductible up to 10% of aggregate income. If you donate more than 10%, the excess is not deductible (unless a different subsection or special relief applies).

• No minimum donation: LHDN does not usually set a minimum amount for an eligible donation, but organisations may have internal thresholds for issuing receipts.

• Special caps: certain donation categories (e.g., paintings, medical equipment, or national projects) may have different caps or treatment, consult the LHDN guidelines for specifics.

What Documents Are Required to Claim?

To claim donation relief you need:

• Official donation receipt (Tax-Exemption Receipt / Tax-Deductible Receipt) showing: donor name, IC/BRN, donation amount, date, and LHDN approval reference (where applicable). LHDN details the acceptable receipt formats.

• e-Invoices or consolidated e-Invoices if the charity issues them (see 2025 e-Invoice notes below).

• Supporting bank records (transfer confirmations) are helpful for audits. Keep all records for 7 years in case LHDN requests verification.

Updates for 2025: e-Invoicing & New Rules

LHDN has introduced e-Invoicing and guidance covering donations: charities and approved institutions are required to issue e-Invoices (individual or consolidated) for donations received, with some exceptions.

Malaysia’s e-Invoicing rollout began in 2024 and expanded in 2025, businesses and organisations should prepare to issue and store structured e-Invoices to meet compliance. This change affects how donation receipts are issued and stored digitally.

Record keeping: keep e-Invoices and receipts for 7 years; many taxpayers already follow this retention practice.

How to Maximise Donation Tax Relief

• Time donations: donate before the year-end if you want the deduction for the same Year of Assessment.

• Plan within the 10% cap: if you expect high taxable income, schedule donations to use the full 10% cap across years.

• Use both routes: individuals and companies can both give, companies may have separate corporate deduction routes; combine strategies with an accountant.

• Request correct receipts: ask the NGO for the exact LHDN approval reference and ensure your IC/BRN appears on the receipt.

• Support approved national projects if you want particular treatment, these sometimes have targeted incentives.

Donation Tax Deduction Calculator (Quick Guide)

1. Compute your aggregate income for the assessment year.

2. Sum all eligible donations (only those to LHDN-approved institutions, with receipts/e-Invoices).

3. Calculate 10% cap = 0.10 × aggregate income.

4. Deduct lesser of (sum of donations) and (10% cap) from your aggregate income to get new chargeable income.

5. Estimate tax saving = donation deduction × your marginal tax rate.

This quick method gives you a practical estimate before you file.

FAQs: People Also Ask

Is donation tax deductible in Malaysia? 

Yes, donations to LHDN-approved organisations are tax-deductible subject to the Income Tax Act and LHDN rules. Always confirm approval and keep the official receipt.

What’s the maximum donation deduction for taxes? 

Generally 10% of aggregate income in the assessment year for donations to approved institutions. Some other donation categories may have different treatments.

What is the minimum donation for exemption? 

LHDN does not set a minimum for eligibility, but NGOs may have internal thresholds for issuing tax-deductible receipts. For example, some charities issue formal receipts only above RM50 or RM10 depending on policy; check the NGO’s donation page.

Is UNICEF donation tax deductible in Malaysia? 

UNICEF Malaysia publishes its tax approval details and issues tax-deductible receipts for qualifying donations (check their donor pages for current reference numbers and effective periods).

How do we check if a charity is approved? 

Ask the charity for its LHDN approval reference and cross-check LHDN’s guidelines/list or the official Subsection 44(6) page. Use LHDN resources as the primary source of truth.

Final Words

Donation tax relief is a simple, legal way to support causes while easing your tax burden. Key takeaways for 2025:

• Donations to LHDN-approved NGOs qualify, check Subsection 44(6) guidance.

• Limit: generally 10% of aggregate income, unless a different rule applies.

• Documentation: keep official receipts or e-Invoices, include donor details and LHDN reference, and retain records for 7 years.

For authoritative reading and to confirm current approval lists or e-Invoicing rules, check LHDN’s official pages and PDFs on donation approval and e-Invoice implementation.