Malaysia’s Budget 2027 introduces personal income tax cuts, expanded tax reliefs, corporate incentives and stamp duty exemptions. The package also extends green technology and sustainable finance incentives, supports MSME financing, and promotes investment, international business events and the creative sector.

RF Report

Malaysia’s Prime Minister and Minister of Finance presented the 2027 budget on 9 October 2026, outlining a strategic fiscal roadmap to drive sustainable economic momentum while easing cost-of-living pressures.

Malaysia’s Budget 2027 targets MYR 297 billion in tax revenue, a 5.8% increase from the revised 2026 estimate of MYR 280 billion. Its key priorities are increasing disposable income through middle-income tax cuts and updated reliefs, improving MSME competitiveness through tax reductions and operational support, and promoting green energy and digital technology adoption.

Micro, small & medium enterprises (MSMEs) & corporate tax

  • MSME rate cuts: 1% rate reductions to 14% (first MYR 150,000) and 16% (MYR 150,001 to MYR 600,000), offering up to MYR 6,000 in tax savings.
  • Cashless salary mandate: Disallowance of tax deductions for salary expenses paid in cash (must go through banking/cashless systems starting YA 2028, with MSMEs exempted).
  • Small value assets & allowances: Increase in per-asset capital allowance threshold to MYR 3,000 and annual cap to MYR 30,000 for non-MSMEs; extension of Accelerated Capital Allowances (ACA) for local plant, machinery, and ICT equipment through 2030.
  • Strategic industry incentives: Up to MYR 5 million tax deduction on relocation costs for automotive vendors moving to Automotive Hi-Tech Valley (Perak); tax deductions for employers repaying employee PTPTN loans (YA 2027–2028).

Green transition, sustainable finance & global hubs

  • Green technology tax incentives: The Green Investment Tax Allowance (GITA) will be extended through 31 December 2030, with tiered incentives for green hydrogen, EV charging infrastructure, renewable energy and Battery Energy Storage Systems (BESS).
  • Sustainable capital markets: Tax deductions will be available for the issuance costs of Sukuk under the new Sukuk Prisma framework to support sustainability-focused investments.
  • Global services hub (GSH): Enhanced tax incentives include a special 5% tax rate for up to 30 years, withholding tax exemptions on interest and a 100% stamp duty exemption on foreign currency-denominated intercompany loans.
  • Shipping fleet growth: The 100% income tax exemption for qualifying Malaysian shipping companies will be extended until Year of Assessment (YA) 2036, subject to local employment and expenditure requirements.

Indirect taxes, stamp duty & housing policy

  • First-home ownership: 100% stamp duty exemption on homes up to MYR 500,000; for homes priced MYR 500,001 to MYR 750,000, 100% exemption on the first MYR 500k and 50% on the remainder (SPA dates 2027–2030).
  • Duty caps & exemptions: Cap on foreign currency loan stamp duty at MYR 2,000 (up to MYR 100m) and MYR 5,000 (above MYR 100m); 100% exemption on opening savings/current accounts and revival of abandoned housing projects.
  • Tourism & duty-free islands: Increase in duty-free personal goods allowance to MYR 10,000 for visitors to Langkawi and Labuan; extension of Federal Territory entertainment duty exemptions.
  • Elderly care relief: Service tax rate reduced from 8% to 6%, with full service tax exemption for care services charging up to MYR 96,000 annually per person.

Personal income tax reforms & living cost reliefs

  • Basic personal relief: Increase the basic personal tax relief from MYR 9,000 to MYR 12,000, reducing the taxable income of individual taxpayers.
  • Middle-income tax cuts: Reduce tax rates by 1% for chargeable income between MYR 70,001 and MYR 100,000, from 19% to 18%, and between MYR 100,001 and MYR 150,000, from 25% to 24%. Eligible taxpayers could save up to MYR 800 in income tax.
  • Top tax bracket: Lower the threshold for the 30% tax rate from MYR 2 million to chargeable income exceeding MYR 1 million, bringing more high-income earners within the top tax bracket.
  • Lifestyle and digital expenses: Expand the existing MYR 2,500 lifestyle relief to cover AI software subscriptions, eligible pet adoption fees from registered shelters and veterinary care provided by registered practitioners.
  • Sports and education: Extend eligible sports expenses to include sports shoes, with relief of up to MYR 300 within the existing MYR 1,000 sports relief limit. The proposals also provide relief of up to MYR 3,000 for technical and vocational education and training (TVET) fees and MYR 2,000 for children’s STEM and skills classes.
  • Social protection: Extend the MYR 350 SOCSO tax relief to self-employed gig and transport workers contributing under the LINDUNG KENDIRI scheme. An additional MYR 150 relief will also be available for voluntary contributions to LINDUNG 24.

Alternative financing & start-up investment incentives

  • Equity crowdfunding (ECF): The individual tax exemption for ECF investments—covering 50% of the investment amount (capped at RM50,000 or 10% of aggregate income)—is extended for four years through 31 December 2030.
  • Angel investors: The income tax exemption for angel investors funding pre-seed and seed-stage tech start-ups is extended for four years through 31 December 2030.
  • P2P & CAKNA financing schemes: Stamp duty remissions for Peer-to-Peer (P2P) financing agreements exceeding RM10 are extended through 31 December 2030. Stamp duty remissions for the CAKNA I and CAKNA II schemes (supporting MSMEs with government contract financing) are extended or reintroduced through 2030.
  • Mid-tier company (MTC) supplier financing: Stamp duty in excess of RM10 is remitted on second-tier credit facility agreements between financial institutions and MTCs, encouraging early liquidity for MSME suppliers.

Islamic finance & asset management

  • Shariah-compliant fund managers: The tax exemption rate on statutory income for resident Shariah-compliant fund managers is set at 40% (previously 60%) and extended for 3 years from YA 2028 to YA 2030.
  • Multi-family office (MFO) incentive: Multi-Family Office entities established in Malaysia can receive income tax exemptions for up to 20 years.

Supply chain, trade & business events

  • Sales tax refunds for traders: From 1 January 2027, local traders and distributors can claim sales tax refunds on machinery, spare parts, equipment and raw materials supplied to approved manufacturers.
  • MICE and international business events: The 100% tax exemption on statutory income from organising international incentive trips, conferences and trade exhibitions in Malaysia will be extended for three years, covering YA 2028 to YA 2030.

Creative arts, entertainment & heritage venues

  • Local films and theatre: A 100% entertainment duty exemption will apply to ticket sales for local cinema screenings and theatre performances in the Federal Territories from 1 January 2027 to 31 December 2030.
  • Heritage sports and cultural venues: Entertainment duty exemptions will be expanded to cover arts, cultural and sporting events held at historic venues, including Stadium Merdeka and Stadium Negara.
  • Concessionary entertainment duty rates: Reduced rates will continue until 31 December 2030, including 0% for local performers, 5% for theme parks and family centres, and 10% for international shows.

Earlier, Prime Minister Anwar Ibrahim announced that the 2027 budget would be presented on 9 October, with expectations that it would prioritise targeted household support, including personal income tax cuts and cash assistance for low-income households, rather than broad-based stimulus measures.