Budget 2027, tabled on 9 October, sets federal expenditure at RM459.8 billion, or 19.8% of gross domestic product, according to a summary by KPMG. The government expects the economy to grow by 4.2% to 5.2% in 2027 and aims to narrow the fiscal deficit to 3.3% of GDP, from a revised 3.6% this year.
Lower rates for MSMEs
For micro, small and medium enterprises, the tax rate on the first RM150,000 of chargeable income falls from 15% to 14%, and the rate on income from RM150,001 to RM600,000 falls from 17% to 16%. Income above RM600,000 stays at 24%. The changes apply from year of assessment 2027.
Other measures for businesses
- Accelerated capital allowance (20% initial and 40% annual) extended to 31 December 2030.
- The small value asset limit raised from RM2,000 to RM3,000, with the annual cap for companies that are not MSMEs raised from RM20,000 to RM30,000.
- A sales tax refund facility for local traders and distributors that supply manufacturers, from 1 January 2027.
- Service tax on elderly care services reduced from 8% to 6%, from 1 January 2027.
- Stamp duty on foreign currency loan agreements from banks capped at RM2,000 for facilities up to RM100 million and RM5,000 above that, for agreements executed from 1 January 2027.
According to EY, a preferential tax rate of 5% will apply to qualifying new Global Services Hub companies and to the qualifying incremental income of existing Global Services Hub and Principal Hub companies. The incentive can be renewed in five-year periods for up to 30 years.
Not law yet
Budget proposals take effect only after the relevant legislation, usually the Finance Bill, is passed and gazetted. Businesses should confirm the final wording and conditions before relying on them.
Sources
KPMG Malaysia: Budget 2027 Snapshot
EY Malaysia: Budget 2027 press release (9 Oct 2026)