Value of Living Accommodation (VOLA) in Malaysia 

Under Section 13(1)(c) of the Income Tax Act 1967 (ITA), the Value of Living Accommodation (VOLA) refers to the benefit provided by an employer to an employee in the form of housing or accommodation.
According to Public Ruling No. 3/2005 issued by the Inland Revenue Board of Malaysia (LHDN), this benefit is a benefit-in-kind (BIK) that is not convertible into money but still taxable as employment income.

What Is Considered Value of Living Accommodation?

VOLA arises when an employer provides accommodation to an employee as part of the employment arrangement.
If furniture is also provided with the accommodation, its value is excluded from VOLA because it is taxed separately under Section 13(1)(b) of the ITA.

📌 If the accommodation is provided mid-year or for less than 12 months, the value must be time-apportioned based on the period the accommodation is available, not the actual period of occupation.

Category 1: Employee or Service Director

A Service Director is a director employed in a managerial or technical capacity who holds ≤ 5% of the ordinary share capital of the company.

The computation for VOLA is the lower of:
1️⃣ Defined value of the accommodation; or
2️⃣ 30% of gross income from employment under Paragraph 13(1)(a) (excluding ESOS — Employee Share Option Scheme).

Defined value can be reduced by:

• Sharing the accommodation with another employee.
• Using part of the accommodation for business purposes.

💡 Example: If the RM 2,000 accommodation is used 20% for business, only RM 1,600 is taxable.

Category 2: Directors of Controlled Companies

A Controlled Company Director includes:

• Anyone occupying the position of director;
• A person whose directions or instructions the directors customarily act upon; and
• Any person who:
  • is a manager of the company,
  • is remunerated from company funds, and
  • either alone or with associates (as defined in Section 139(7) ITA) owns or controls ≥ 20% of the ordinary share capital.

For such directors, the VOLA is based on the defined value of the accommodation only.
The defined value may be reduced only if the accommodation is shared with another employee.

Category 3: Hostel or Similar Accommodation

When the accommodation provided is:
a) in a hotel, hostel or similar premises; or
b) located in a plantation or forest area; or
c) premises that are in a ratable area but not subject to rates,

the amount to be included as VOLA is 3% of the gross income under Paragraph 13(1)(a) ITA (excluding ESOS).

Deduction of Certain Expenses under Section 38 ITA

When an employer provides fully furnished accommodation and its value is included in the employee’s gross income, the employee may claim certain deductions under Section 38 ITA:

✅ Rent paid by the employee (for the accommodation and furniture).
✅ Public rates, insurance, repairs and maintenance (if borne by the employee).

These deductions are allowed only against the value of accommodation included in the employee’s gross income.

Key Takeaways

• VOLA is taxable under Section 13(1)(c) of the ITA.
• Different rules apply for employees, service directors, and controlled company directors.
• Defined values can be reduced for shared or business-use accommodations.
• Employees may claim deductions for rent and related expenses under Section 38.
• Always maintain clear records and supporting documents to ensure tax compliance.

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We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.

If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.