Can I capitalise website costs?
Under MFRS, only when the site can show it will bring in money. Taking orders online is the standard's own example. A site built mainly to promote your own services is an expense when you pay for it. That is IC Interpretation 132, paragraph 8, issued by MASB. Most private companies report under MPERS instead. It also expenses advertising and promotion, and spending made inside the firm on an intangible item.
Can I deduct website development costs?
Your tax return answers this apart from your accounts. No LHDN ruling we read names a website. The routes LHDN has published are for computer software and ICT equipment. Budget 2026 adds a faster allowance for software spending from 11 October 2025 to 31 December 2026. It covers a developer's fees for custom software too. Whether your site counts as software turns on your own facts.Your tax agent confirms this for your firm.
The same five stages, two kinds of website
MASB splits a website into five stages. What each stage becomes in your accounts depends on what the site is for.
Built mainly to promote your firmA broker's or adjuster's usual site
- PlanningExpense
- BuildExpense
- DesignExpense
- ContentExpense
- RunningExpense
Built to earn revenueFor example, it takes orders
- PlanningExpense
- BuildAsset, if tested
- DesignAsset, if tested
- ContentAsset, except promotion
- RunningExpense
- Expense in the year you pay
- Can be an asset, spread over a short life
"If tested" means the site must meet MFRS 138's tests for development spending. The standard asks the firm to show how the site will bring in money. Once on the books, its useful life "should be short", in the standard's own words (paragraph 10).
Stage by stage: your accounts and your tax return
Each line names its source. The two columns can give different answers, because the tax law has its own tests.
Scroll the table sideways →
| Stage | Your accounts (MFRS) | Your tax return (LHDN) |
|---|---|---|
| PlanningGoals, options, choosing a studio | Expense when incurred.IC Int 132, para 9(a) | The LHDN rulings we read are silent on this stage. |
| BuildDomain, software, servers, testing | An asset only if the site passes the revenue test. Otherwise an expense. Servers follow MFRS 116.IC Int 132, paras 5, 8 and 9(b) | Software packages and ICT equipment can qualify for capital allowance.PR 12/2014, para 8.1; PR 6/2022, para 7.8 |
| Design and custom workPage design, coding by a studio | The same revenue test as the build.IC Int 132, para 9(b) | A developer's fees sit outside the cost of software for the normal allowance. Budget 2026 lists them for its faster allowance.PR 12/2014, para 8.2(ii); Budget 2026, Appendix 21 |
| ContentWords, photos, documents | Content that promotes your own services is an expense. Other content follows the revenue test.IC Int 132, para 9(b) and 9(c) | The LHDN rulings we read are silent on this stage. |
| RunningHosting, updates, maintenance | Expense, unless it meets MFRS 138's asset test. Hosting is an expense as you receive it.IC Int 132, paras 5 and 9(d) | The LHDN rulings we read are silent on this stage. |
If your firm reports under MPERS, Section 18 applies instead. It expenses spending made inside the firm on an intangible item, and all advertising and promotion (paragraphs 18.14 and 18.15). A bought-in intangible has its own test (paragraph 18.4). Which one fits your site depends on how it was made. Your auditor decides.
The two faster allowances for software
An allowance lets you write capital spending off against tax over time. A faster one shortens that time. Neither rule names a website.
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| Route | What it covers | Rate | Spending dates |
|---|---|---|---|
| ICT allowanceP.U.(A) 156/2018; PR 6/2022, para 7.8 | ICT equipment for your business. Its list includes software systems and software packages. | 20% + 20% | From year of assessment 2017, as the ruling of 22 Dec 2022 lists it |
| Budget 2026 allowanceBudget 2026, Appendix 21 | ICT equipment and software. Also consultation, licensing and incidental fees for custom software development. | 20% + 40% | 11 Oct 2025 to 31 Dec 2026, fully claimed within two years |
The first figure is the initial allowance and the second is the annual one. One asset takes one of two routes, the Ministry of Finance says. It is the Budget 2026 allowance or the 2024 ICT rules, P.U.(A) 328/2024.
The Ministry lists papers that support a claim. They include the purchase invoice, proof of payment and delivery or installation papers. They also include your accounting record showing the asset as a capital asset. So settle the accounts with your auditor and the claim with your tax agent together, before the year closes.
What principals ask us about website costs and tax
Is a website an intangible asset?
Under MFRS, a firm's own website that comes from development is an internally generated intangible asset. IC Interpretation 132 says so in paragraph 7. It goes on the books only if it passes the tests in paragraph 8. A site built mainly to advertise your own services does not pass them.
Is a website software for capital allowance?
No LHDN ruling we read says either way. PR 12/2014 treats software systems and packages as qualifying plant. It also says fees to develop software sit outside the software's cost. Where your site falls depends on how it was built and paid for. Your tax agent confirms this for your firm.
Does the Budget 2026 accelerated capital allowance cover a website?
Budget 2026, Appendix 21, covers ICT equipment and computer software. It also covers consultation, licensing and incidental fees for custom software development. The spending must fall between 11 October 2025 and 31 December 2026. The rule does not name websites. Whether your build counts is a question for your tax agent.
Can I claim website hosting and maintenance?
In your accounts, hosting is an expense as you receive it. Running costs are an expense too, unless they meet MFRS 138's asset test. That is IC Interpretation 132, paragraphs 5 and 9(d). No LHDN ruling we read names hosting or maintenance. Your tax agent confirms the tax side.
Does MPERS treat website costs the same way?
MPERS (2025) carries no website rule of its own. Its Section 18 expenses spending made inside the firm on an intangible item. It also expenses all advertising and promotion. A bought-in intangible has its own test in paragraph 18.4. The revised MPERS applies from 1 January 2027. Paragraphs 18.14 and 18.15 read the same in both editions.
Can Upcial split a quote by stage?
Every line in our quote comes from the published price page. Each tier and each add-on has its own fixed price. Your tax agent can place each line against the table above.
Where this comes from
The accounting stages are from MASB's IC Interpretation 132, Intangible Assets: Web Site Costs. It is MASB's copy of SIC-32 and applies for periods from 1 January 2012. The MPERS paragraphs are from MPERS (2016) and MPERS (2025). All were read on 29 September 2026.
The tax lines are from LHDN's Public Ruling 12/2014 of 31 December 2014 and Public Ruling 6/2022 of 22 December 2022. Both are in Malay and summarised here in our own words. The Budget 2026 allowance is from the joint memorandum on Budget 2026, with the Ministry of Finance's replies, as LHDN publishes it. All were read on 29 September 2026.
This page explains the published rules. It is general information only. Your tax agent confirms this for your firm, and your auditor settles the accounts.