Budget 2027: What Businesses and Individuals Need to Know

Tabled on 9 October 2026, Budget 2027 carries a federal allocation of RM459.8 billion (RM510 billion including investment by GLICs, statutory bodies and public-private projects) and aims to narrow the fiscal deficit from 3.6% of GDP in 2026 to 3.3% in 2027. GDP growth is projected at 4.2%–5.2%.

The theme is clear: ease cost-of-living pressure for the middle class, give SMEs room to breathe, and keep Malaysia attractive to regional investors. Below are the measures that matter most for our clients.

1. Individuals

• Individual relief raised from RM9,000 to RM12,000 (first change since YA 2010), from YA 2027.
• Tax rates cut by 1 percentage point: RM70,001–RM100,000 now 18%; RM100,001–RM150,000 now 24%.
• New top rate of 30% applies to chargeable income above RM1 million (previously above RM2 million).
• Broader reliefs: postnatal care, care of parents and grandparents (all care expenses), sports shoes, education and skills training, AI subscriptions, pet adoption and vaccination, and SOCSO (including LINDUNG Kendiri).
• The Government estimates about 5 million taxpayers will gain up to RM1,600 in disposable income.

2. SMEs and businesses

• Qualifying MSME tax rates cut to 14% (first RM150,000) and 16% (RM150,001–RM600,000), from YA 2027. The rate above RM600,000 stays at 24%. Maximum saving is RM6,000.
• Small value asset allowance: RM2,000 per asset raised to RM3,000. For non-MSMEs, the annual claim limit rises from RM20,000 to RM30,000.
• Accelerated capital allowance for locally produced plant and machinery, ICT equipment and software extended to 31 December 2030.
• Manufacturers can reclaim sales tax paid on machinery, spare parts and equipment bought from local traders or distributors.
• Employer deduction for PTPTN repayments made on behalf of employees (1 January 2027 to 31 December 2028).
• Tax deduction for companies running Bakat MADANI training (29 June 2026 to 31 December 2030).
• MediAsas: for SMEs with fewer than 75 employees, the Government will subsidise the first-year premium by RM200 per employee, capped at 50 employees per company.

3. Wages and employment

• Minimum wage rises from RM1,700 to RM2,000 from June 2027. MSMEs with annual sales below RM50 million are exempted.
• New starting wage framework of RM2,500 per month for semi-skilled workers and graduates.
• Companies other than MSMEs will only be able to claim a tax deduction for wages paid through a bank account permitted under the Employment Act 1955.
• Employers should review payroll costs and budgets early.

4. Stamp duty

• First-home buyers: full exemption on loan agreements and transfers for homes up to RM500,000. For homes up to RM750,000, the first RM500,000 is fully exempt and the balance 50% exempt (SPAs executed 1 January 2027 to 31 December 2030).
• Fixed RM10 duty on P2P loan agreements and on CAKNA II loans; RM10 on agreements for the utilisation of excess credit under bank facilities that support MSME cash flow (1 January 2027 to 31 December 2030).
• Full exemption on opening savings and current accounts from 1 January 2027.
• Duty on loans to buy or build Malaysian ships capped at RM2,000 (up to RM100 million) or RM5,000 (above RM100 million).

5. Investment, capital markets and Johor

• Global Services Hub: 5% preferential rate for new companies and for income above baseline for existing hubs; incentive renewable in five-year blocks up to 30 years; withholding tax and stamp duty exemptions on qualifying treasury activities, extended to the JS-SEZ package.
• Single Family Office scheme (zero tax on qualifying income for up to 20 years) and a new Multi-Family Office model in Forest City.
• Green tax incentives (up to 100% Investment Tax Allowance) extended to 31 December 2030.
• The Securities Commission and the Hong Kong regulator have formalised dual-listing cooperation, with matching grants for listing costs.
• Reinvestment Allowance is under review.
• Shariah-compliant fund managers: 40% income tax exemption for YA 2028–2030.

Our view

Budget 2027 is relief-heavy for the middle class and SMEs, but pairs it with higher labour costs. Businesses should model the minimum wage impact now, review cash-flow position against the new SME rates, and revisit capital expenditure timing.

All measures are proposals announced in the Budget speech and remain subject to the Finance Bill, gazetted orders and LHDN guidelines. Please contact us to discuss how these changes affect your business.