Is a Website Tax Deductible in Malaysia? (2027 Guide)
How Malaysian businesses claim website costs: which parts are expenses, which are capital allowances, and the ACA rates Budget 2027 extended to 2030.
Yes, but not all at once and not all the same way. In Malaysia the running costs of a website (domain, hosting, maintenance, ads) are deducted as business expenses in the year you pay them. The cost of building the site is capital expenditure, and you claim it through capital allowances over two to five years, depending on which rules it falls under. Budget 2027, tabled on 9 October 2026, proposed extending the Accelerated Capital Allowance on ICT equipment and software to 31 December 2030, which keeps the fastest route open until the end of the decade.
This guide is for company directors and business owners deciding whether to build or rebuild a website. It is not tax advice. The rates below come from gazetted rules and the Budget 2027 speech, but your tax agent decides how your invoice is classified.
Which website costs are expenses and which are capital?
The first question LHDN asks is whether the spend created a lasting asset or kept an existing one running. That split decides everything else.
| What you paid for | Treatment | How you claim it |
|---|---|---|
| Domain renewal, hosting, SSL, business email | Revenue expense | Deduct in full in the year incurred |
| Maintenance plan, security updates, content changes | Revenue expense | Deduct in full in the year incurred |
| Google Ads, Meta ads, SEO retainer | Revenue expense | Deduct in full in the year incurred |
| Shopify, SHOPLINE or other monthly platform subscription | Revenue expense | Deduct in full in the year incurred |
| Design and build of a new website or online store | Usually capital expenditure | Capital allowance, if it qualifies under the rules below |
| Custom features, integrations, web application | Usually capital expenditure | Often the customised software rules |
| Laptops, phones, POS hardware under RM3,000 each | Small-value asset | 100% write-off in year one from YA 2027 |
A redesign sits on the line. If the agency rebuilt the site from scratch, it is capital. If they refreshed pages on the same platform, your tax agent may treat it as maintenance. Ask for the invoice to describe the work plainly so the classification is not left to guesswork.
The three sets of rules that can apply to a website build
Malaysia has no rule that says “website”. A website build is claimed under whichever of these it fits.
1. Customised computer software rules
The Income Tax (Capital Allowance) (Development Cost for Customised Computer Software) Rules 2024 cover consultation fees, payments for rights of software ownership and incidental fees for developing customised software. From YA 2024 the rates are a 40% initial allowance and a 20% annual allowance. Both are claimed in the first year, so 60% goes in year one and the cost is fully claimed over three years of assessment.
The rules also set the timing. The cost is treated as incurred in the year the software is capable of being used in your business, not the year you paid for it. A build paid in December that goes live in February falls into the later year.
A custom-built website or web application, where the agency writes code for you and you own it, is the closest fit for most agency builds. A template site on a hosted builder is not customised software, and a subscription platform is not capital at all.
2. Accelerated Capital Allowance on ICT equipment and software
Budget 2026 introduced an ACA for companies, with a 20% initial and 40% annual allowance for qualifying capital expenditure on ICT equipment, software packages and customised software development incurred from 11 October 2025 to 31 December 2026. That clears the whole cost within two years of assessment instead of three.
Budget 2027 proposed extending this to 31 December 2030. The extension still has to pass in the Finance Bill, so treat the 2030 date as expected rather than final. If it passes, there is no longer a reason to rush a build before 31 December 2026 to catch the window.
A separate set of ACA rules gazetted in April 2026 (P.U.(A) 162/2026 for ICT equipment and P.U.(A) 163/2026 for customised software) give the same 20% and 40% rates for YA 2024 to YA 2027. These cover spending on e-invoicing, such as an e-invoice system or integration, not a website build. They are open to resident companies that met their e-invoicing timeline without an IRBM extension. Our e-invoice guide covers the timelines.
3. E-commerce website rules from 2003
The Income Tax (Deduction for Cost of Developing Website) Rules 2003 allow a deduction of one-fifth of the cost of an e-commerce-enabled website each year for five years. The site must be certified by MCMC, hosted in Malaysia, use a .my domain and have a shopping cart with encryption. MCMC still publishes the certification guidelines, but five years is slower than either route above, and the certification is extra work. For most online stores the customised software or ACA route is the better claim. Mention the 2003 rules to your tax agent only if your build does not qualify for the others.
What Budget 2027 proposed
Two measures matter for website and system spending:
- ACA extended to 31 December 2030 for ICT equipment and software, and for locally produced plant and machinery. The rates stay at 20% initial and 40% annual.
- Small-value asset limit raised from RM2,000 to RM3,000 per asset from YA 2027. These are written off in full in the year of purchase. For companies outside the MSME definition the yearly cap rises to RM30,000. MSME companies have no cap. LHDN’s ruling on this allowance uses physical equipment as its examples and does not say whether a website counts, so do not plan a cheap website around it without your tax agent’s view.
Budget 2027 also cut the MSME tax rate by one percentage point from YA 2027, which slightly reduces the ringgit value of every allowance. Our Budget 2027 guide for SMEs has the full list.
Worked example: a RM15,000 corporate website
A Sdn Bhd that qualifies as an MSME builds a custom corporate website for RM15,000 in 2027. The agency wrote the code and the company owns it. The company is profitable and pays 14% on its first RM150,000 of chargeable income under the Budget 2027 rate.
| Route | YA 2027 allowance | YA 2028 | YA 2029 | YA 2030 | Tax saved in YA 2027 at 14% |
|---|---|---|---|---|---|
| ACA, 20% initial + 40% annual | RM9,000 | RM6,000 | 0 | 0 | RM1,260 |
| Customised software, 40% initial + 20% annual | RM9,000 | RM3,000 | RM3,000 | 0 | RM1,260 |
| E-commerce rules 2003, 20% a year | RM3,000 | RM3,000 | RM3,000 | RM3,000 | RM420 |
The total tax saved is the same RM2,100 under every route. The difference is timing, and timing is cash flow. Under the ACA the full RM15,000 is claimed by YA 2028. Year one shows 60% under both capital allowance routes because the initial and annual allowance are claimed together in the first year. The example assumes the site goes live in the same year it is paid for, and no other reliefs. Your tax agent will run the real figures.
Two cautions. Capital allowances are only useful if the business has taxable profit to set them against, though unused allowances carry forward. And if you dispose of the asset within two years, LHDN can withdraw the allowance unless there is a genuine commercial reason. That matters if you plan to scrap and rebuild the site again quickly.
Can a grant and a capital allowance both apply?
There is no general website grant open in October 2026. The Geran Digital PMKS MADANI, which paid 50% of a digital service up to RM5,000, closed to new applications on 6 September 2025.
If a grant does pay part of a build in future, how it affects your capital allowance claim depends on the grant’s terms and how it is recorded in your accounts. Ask your tax agent to look at both together rather than assuming a fixed formula.
What to do before you sign a website quote
- Ask for a split invoice. Build cost on one line, hosting and maintenance on another. Mixed invoices make your tax agent guess.
- Confirm you own the code. Ownership is a condition of the customised software rules. A site locked inside an agency’s proprietary builder may not qualify.
- Keep e-invoicing spend separate. If part of the project is an e-invoice integration, put it on its own line. The e-invoicing ACA rules may cover that part if you met your e-invoicing timeline.
- Plan the go-live date. Under the customised software rules the cost counts in the year the site is ready for business use. A December payment with a January launch lands in the next tax year.
- Keep the Budget 2027 extension in view. If the Finance Bill passes, a company’s build in 2027 gets the same two-year write-off as one in 2026.
The build price itself is covered in our website cost guide. If you want a quote written so the capital and running costs are already separated, our web design service and e-commerce service both do that as standard.
Frequently asked questions
Is website hosting tax deductible in Malaysia?
Yes. Hosting, domain renewals, SSL and business email are revenue expenses and are deducted in full in the year they are paid, under the general deduction rule in section 33 of the Income Tax Act.
Is a Shopify subscription a capital expense?
No. A monthly or yearly platform subscription is a revenue expense. You never own the software, so there is nothing to claim capital allowances on. Theme customisation or app development you pay a developer for may be capital.
Can a sole proprietor claim capital allowances on a website?
Generally yes, if the build qualifies. Capital allowances apply to any business source, so a sole proprietor can use the customised software rules. The Accelerated Capital Allowance is for companies only. The saving is worth your marginal personal tax rate instead of the company rate.
Does the RM3,000 small-value asset limit cover a website?
Not clearly. LHDN’s public ruling on small-value assets uses equipment such as ovens, chairs and air conditioners as examples and says nothing about websites. Treat the allowance as meant for laptops, phones and similar equipment unless your tax agent advises otherwise.
Is the ACA extension to 2030 confirmed?
It was announced in the Budget 2027 speech on 9 October 2026. It takes effect when the Finance Bill passes and the rules are gazetted. Until then, the confirmed window ends 31 December 2026.
Sources: Ministry of Finance, Budget 2027 tax measures, Appendices 12 and 28; Income Tax (Capital Allowance) (Development Cost for Customised Computer Software) Rules 2024, P.U. (A) 327/2024; Income Tax (Capital Allowance) rules for e-invoicing, P.U. (A) 162/2026 and 163/2026; LHDN, Public Ruling No. 4/2026; the Geran Digital PMKS MADANI application page linked from BSN. Checked 18 October 2026.