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Highlights of Malaysia Budget 2027 on 9 October 2026
On 9 October 2026, Dato’ Seri Anwar bin Ibrahim, Prime Minister cum Finance Minister has tabled Budget 2027. The following is the summary of the tax measures for Malaysia Budget 2027.
Personal Tax
Review of Income Tax Rates for Resident Individuals
Proposal: The income tax rates are proposed to be restructured. The rate for the RM70,001 to RM100,000 band will be reduced from 19% to 18%. A new band for RM100,001 to RM150,000 will be created with a rate of 24% (reduced from 25%). The highest tax rate of 30% will apply to chargeable income exceeding RM1,000,000, instead of the previous RM2,000,000 threshold.
Effective Date: From Year of Assessment (YA) 2027.
Expansion of Tax Relief for Individual and Dependent Relatives
Proposal: The basic individual income tax relief is proposed to be increased from RM9,000 to RM12,000.
Effective Date: From YA 2027.
Review of Tax Relief for Parents and Grandparents
Proposal: The relief for medical treatment, special needs, and carer expenses for parents or grandparents, capped at RM8,000, is expanded to cover all care expenses at home, day care centres, or residential care centres, not just medical care. Claims must be supported by a carer’s written declaration or work permit, without requiring verification from a registered medical practitioner.
Effective Date: From YA 2027.
Review of Tax Relief for Medical Treatment (Health and Well-being)
Proposal: The relief is reclassified as Health and Well-being, with the limit maintained at RM10,000. It is expanded to include postnatal care services by a confinement centre or qualified individual (limited to RM3,000), and breastfeeding equipment (limited to RM1,000), with the existing standalone breastfeeding relief merged into this category.
Effective Date: From YA 2027.
Review of Tax Relief for Education Fees and Lifestyle
Proposal: The relief for education fees and upskilling courses will be reclassified as Education and Skills Training Fees, with the limit maintained at RM7,000. This covers courses at recognised local institutions, upskilling TVET courses for self or spouse (limited to RM3,000), and courses or training unrelated to employment for self or spouse, or STEM, arts, language, and religion classes for children (limited to RM2,000).
Effective Date: From YA 2027.
Expansion of Tax Relief for Lifestyle
Proposal: The RM2,500 lifestyle relief is expanded to include subscriptions for AI software and applications for personal, spouse, or child use. It also covers pet care expenditures, including pet adoption from registered animal shelters and registered veterinary services for vaccination and spaying or neutering procedures.
Effective Date: From YA 2027.
Review of Tax Relief for Sports-Related Lifestyle
Proposal: The sports-related lifestyle relief, limited to RM1,000, will be expanded to include the purchase of sports shoes, limited to RM300.
Effective Date: From YA 2027.
Extension of Tax Relief for Tourism Expenses
Proposal: The RM1,000 individual income tax relief for domestic tourism expenses, such as entrance fees to tourist attractions and cultural programmes, is proposed to be extended for one year.
Effective Date: For YA 2027.
Expansion of Tax Relief for SOCSO Contributions
Proposal: The scope is expanded to cover mandatory employee contributions to the Self-Employment Social Security Scheme (LINDUNG KENDIRI) for three sectors (passenger transport, goods/food transport, hawkers), maintaining the RM350 limit. An additional relief of up to RM150 is given for voluntary contributions to the Non-Employment Injury Scheme (LINDUNG 24) and 17 non-mandatory sectors.
Effective Date: From YA 2027.
Corporate Tax
Reduction of Income Tax Rates for MSMEs
Proposal: For Micro, Small, and Medium Enterprises (MSMEs), the income tax rate on the first RM150,000 of chargeable income is reduced from 15% to 14%. The rate for chargeable income from RM150,001 to RM600,000 is reduced from 17% to 16%.
Effective Date: From YA 2027.
Enhancement of Capital Allowance for Small Value Assets
Proposal: The value limit for each small value asset eligible for capital allowance will be increased from RM2,000 to RM3,000. The overall annual claim limit for companies other than MSMEs will be increased from RM20,000 to RM30,000.
Effective Date: From YA 2027.
Tax Deduction for Cashless Salary Payments
Proposal: Tax deductions for salary expenses will only be allowed for payments made through financial institutions or cashless payment instruments. Salary payments by MSMEs are excluded from this requirement.
Effective Date: From YA 2028.
Expansion of School Public Contribution Fund (TSUWAS)
Proposal: The scope of TSUWAS under subsection 44(6) of the Income Tax Act 1967 will be expanded to include administrative and operating expenses, repairs and maintenance, equipment procurement, and student programmes.
Effective Date: From YA 2027.
Tax Incentives
Review of Tax Incentive for Global Services Hub (GSH)
Proposal: New companies will enjoy a 5% tax rate on GSH income, while existing companies will be taxed at 5% or 15% depending on whether they exceed a prescribed base income. The incentive period can be granted for up to 30 years. Additional incentives for Treasury Fund Management activities include withholding tax and stamp duty exemptions.
Effective Date: For applications received by MIDA from 1 January 2027.
Extension of Tax Incentive for Shipping Companies
Proposal: The full income tax exemption for Malaysian shipping companies is extended for 10 years, subject to conditions such as strategic management in Malaysia, a minimum annual operating expenditure of RM250,000 per ship, and employing at least four Malaysian citizens with an average monthly salary of RM15,000 per ship.
Effective Date: From YA 2027 until 2036.
Review of Green Technology Tax Incentive
Proposal: The Green Investment Tax Allowance (GITA) project tiers are streamlined from 3 to 2 tiers. Tier 1 (e.g., green hydrogen, ocean thermal energy conversion) receives 100% GITA on qualifying capital expenditure set against 70% or 100% of statutory income. Tier 2 (e.g., EV charging stations, renewable energy systems) receives 60% GITA set against 70% of statutory income. The GITA Asset incentive is also reviewed to include locally produced EV infrastructure and waste recycling systems.
Effective Date: For applications received/assets purchased from 1 January 2027 to 31 December 2030.
Income Tax Deduction on Issuance Costs of Sukuk Prisma
Proposal: An income tax deduction will be given on the issuance costs of Sukuk Prisma approved, authorised, or lodged with the Securities Commission Malaysia to finance sustainable projects.
Effective Date: From YA 2027 until 2030.
Tax Exemption on Grants under SRI Sukuk and Bond Grant Scheme
Proposal: Grants received under the Sustainable and Responsible Investment (SRI) Sukuk and Bond Grant Scheme will be exempted from income tax.
Effective Date: From 1 January 2027 to 31 December 2030.
Tax Deduction for Repayment of PTPTN Loan by Employers
Proposal: Employers will be given a tax deduction for making PTPTN loan repayments on behalf of full-time employees, provided no consideration is imposed on the employee and the employee is not the business owner or related to the employer.
Effective Date: For repayments made from 1 January 2027 to 31 December 2028.
Extension of Tax Incentive for Angel Investors and Equity Crowdfunding
Proposal: The existing income tax exemptions for angel investors in technology start-ups and individual investors in equity crowdfunding are extended for an additional four years.
Effective Date: For investments made from 1 January 2027 to 31 December 2030.
Accelerated Capital Allowance on Plant, Machinery and ICT Equipment
Proposal: The Accelerated Capital Allowance (ACA) comprising an initial allowance of 20% and an annual allowance of 40% on qualifying capital expenditure for heavy/plant machinery, ICT equipment, and computer software is extended.
Effective Date: For qualifying capital expenditure incurred from 1 January 2027 to 31 December 2030.
Tax Exemption for Shariah-Compliant Fund Management
Proposal: The income tax exemption rate for resident companies providing Shariah-compliant fund management services is revised to 40% of statutory income and extended.
Effective Date: From YA 2028 until 2030.
Tax Deduction for Relocation to Automotive Hi-Tech Valley (AHTV)
Proposal: A tax deduction capped at RM5 million will be given for qualifying relocation expenditures incurred by wholly Malaysian-owned automotive vendors relocating their operations to the AHTV in Tanjong Malim, Perak.
Effective Date: For qualifying expenditure incurred from 1 January 2027 to 31 December 2030.
Tax Deduction for Contributions to Public Universities
Proposal: To encourage contributions from the public and the corporate sector to public universities, donations will enjoy an income tax deduction of up to 10% of aggregate income.
Effective Date: To be announced.
Tax Deduction for “Dapur Siswa MADANI” Contributions
Proposal: A tax deduction will be provided to parties contributing food and equipment to the Dapur Siswa MADANI programme, which ensures meals for university, polytechnic, and teaching institute students.
Effective Date: For contributions made from 1 January 2027 to 31 December 2030.
Tax Deduction for BAKAT MADANI Training Programmes
Proposal: To encourage private-sector participation in youth skills development and employment, companies providing training under the BAKAT MADANI programme will be eligible for a tax deduction.
Effective Date: For the period from 29 June 2026 to 31 December 2030.
Extension for International Events
Proposal: The 100% income tax exemption for organizers of international incentive trips, conferences, and trade exhibitions is extended for three years.
Effective Date: From YA 2028 to YA 2030.
Multi-Family Office (MFO) Model
Proposal: A new MFO model will be introduced in the Forest City Special Financial Zone, allowing licensed fund managers to manage multiple families (including Single Family Offices).
Effective Date: To be determined.
Review of Reinvestment Allowance
Proposal: The framework for the Reinvestment Allowance will be reviewed, including eligibility criteria and mechanisms, to make it more targeted.
Effective Date: To be announced.
Stamp Duty
Review of Stamp Duty on Foreign Currency Loan Agreements
Proposal: The stamp duty imposed on loan or financing agreements in foreign currency from banks in Malaysia will be capped at RM2,000 for loans up to RM100 million, and RM5,000 for loans exceeding RM100 million.
Effective Date: For agreements executed from 1 January 2027.
Exemption of Stamp Duty for First Residential Home
Proposal: The stamp duty exemption is extended. Homes priced up to RM500,000 will receive a 100% exemption. Homes priced between RM500,001 and RM750,000 will receive a 100% exemption on the first RM500,000 and a 50% exemption on the remaining balance.
Effective Date: For agreements executed from 1 January 2027 to 31 December 2030.
Stamp Duty Exemption for Opening Savings and Current Accounts
Proposal: A 100% stamp duty exemption is proposed for instruments executed by individuals or businesses for opening savings and current accounts.
Effective Date: From 1 January 2027.
Remission of Stamp Duty for CAKNA Scheme
Proposal: The remission of stamp duty exceeding RM10 for principal loan or financing agreements under the CAKNA I scheme is extended for 2 years (from 1 January 2029 to 31 December 2030). Remission for CAKNA II agreements is reintroduced.
Effective Date: For agreements executed from 1 January 2027 to 31 December 2030 (CAKNA II).
Stamp Duty Exemption for Revival of Abandoned Housing Projects
Proposal: A 100% stamp duty exemption is proposed on loan agreements and instruments of transfer executed by rescue contractors/developers and original buyers for reviving abandoned housing projects certified by the Ministry of Housing and Local Government.
Effective Date: For agreements executed from 1 January 2027 to 31 December 2030.
Remission for Peer-to-Peer (P2P) Financing
Proposal: A remission of stamp duty exceeding RM10 is proposed for loan or financing agreements executed between MSMEs and investors through P2P platforms.
Effective Date: For loan or financing agreements executed from 1 January 2027 to 31 December 2030.
Remission for Mid-Tier Companies (MTCs)
Proposal: To increase MSME cash flow, stamp duty in excess of RM10 will be remitted on “second-tier” agreements executed between MTCs and financial institutions for excess credit facilities given to MSME suppliers via reverse factoring.
Effective Date: For second tier agreements executed between MTCs and financial institutions from 1 January 2027 to 31 December 2030.
Indirect Sales
Sales Tax Refund Facility for Traders
Proposal: Local traders or distributors will be allowed to claim a sales tax refund on qualifying machinery, spare parts, equipment, and approved inputs supplied to manufacturers.
Effective Date: From 1 January 2027.
Review of Service Tax for Elderly Care Services
Proposal: Elderly care services will be moved to Group I, with the service tax rate reduced from 8% to 6%. A service tax exemption will apply to registered centres charging annual care fees up to RM96,000 per person.
Effective Date: From 1 January 2027.
Review of Import Duty Exemption for Langkawi Origin Goods
Proposal: The import duty exemption for goods originating from Langkawi brought into the Principal Customs Area will be expanded to include items like coconut products, coffee products, cosmetics, handicrafts, and marble etc.
Effective Date: From 1 January 2027.
Increase in Duty-Free Purchase Limit for Visitors in Langkawi and Labuan
Proposal: The value limit for goods eligible for import duty and sales tax exemptions for visitors in Langkawi and Labuan is increased to RM10,000, subject to a minimum 48-hour stay. Exclusions apply for items like alcoholic beverages, cigarettes, and tyres.
Effective Date: From 1 January 2027.
Entertainment Duty Exemption in the Federal Territories
Proposal: Entertainment duty exemptions for selected categories (e.g., international stage performances, theme parks) will be extended. A full 100% exemption will be given for local film screenings and local theatre performances. The exemption is also expanded to events held at Stadium Merdeka and Stadium Negara.
Effective Date: For applications received until 31 December 2030 (and from 1 January 2027 for new inclusions).