Malaysia Budget 2027: Tax Highlights and Key Changes

Malaysia Budget 2027 tax highlights: individual reliefs, MSME rates, stamp duty, incentives.

Malaysia's Budget 2027 tax measures propose the widest set of personal and business tax changes in recent years: a restructured personal rate table, a bigger personal relief, expanded care and health reliefs, a 1-point cut in MSME company rates, broader stamp duty exemptions for home buyers, and multi-year extensions for investment and green incentives. This guide summarises every measure in the 49-page Budget 2027 – Tax Measures appendices document, organised by topic, with the appendix number and PDF page cited for each change so you can check the source yourself.

Budget 2027 tax proposals at a glance

• Personal rates restructured (Appendix 1, PDF p. 4–5): 18% band for RM70,001–100,000, new 24% band for RM100,001–150,000, and the 30% top rate now starts above RM1 million instead of RM2 million.
• Personal relief up to RM12,000 (Appendix 2, p. 6): individual and dependent relatives relief rises from RM9,000.
• Care, health, education and lifestyle reliefs widened (Appendices 3–9, p. 7–15): elderly care without medical verification, postnatal care, AI subscriptions, pet care, sports shoes, TVET, and SOCSO/LINDUNG contributions.
• MSME rates cut by 1 point (Appendix 11, p. 17): first band 14%, second band 16%.
• Stamp duty: first homes to RM750,000 (Appendix 16, p. 22), abandoned-project revival returns (Appendix 17, p. 23), account-opening duty abolished (Appendix 18, p. 24).
• Salary deduction restricted (Appendix 14, p. 20): tax deduction for salary expenses only if paid via banks or cashless instruments – from YA 2028, with an MSME exception.
• Incentives extended: green technology (Appendix 25), equity crowdfunding and angel investors (Appendices 26–27), accelerated capital allowance (Appendix 28), MICE events (Appendix 29), Global Services Hub and shipping (Appendices 23–24).
• Indirect taxes: elderly care service tax cut to 6% (Appendix 34), duty-free island allowance raised to RM10,000 for Langkawi and Labuan (Appendix 32), Langkawi goods list expanded (Appendix 31), sales tax refund for traders (Appendix 33).

Personal income tax rates for residents

Appendix 1 (PDF p. 4–5) proposes the first meaningful restructure of the personal rate table since the top rate reached 30%. The stated aim is to make the system more progressive and ease pressure on middle-income earners. Four changes apply, and the whole table takes effect from YA 2027.

Practical reading: taxpayers earning between RM70,001 and RM150,000 pay one point less; the 30% top rate now captures everyone above RM1 million (previously above RM2 million), so high earners with income between RM1 million and RM2 million move from 28% to 30% on the excess. Marginal relief mechanisms were not addressed in the appendix.

Individual tax reliefs

Personal and dependent relatives relief: RM9,000 to RM12,000

Appendix 2 (p. 6) raises the basic individual relief for the taxpayer and dependent relatives from RM9,000 (unchanged since YA 2010) to RM12,000 – a RM3,000 increase – to boost disposable income against the cost of living. Effective from YA 2027.

Parents and grandparents care relief

Appendix 3 (p. 7) keeps the existing framework for expenses on parents and grandparents – the appendix records the current cap at RM8,000 from YA 2025, while the proposal does not restate a limit – but widens what qualifies: care at home, day care centres and residential care centres now covers all types of care expenses, not only medical care. Claimants no longer need a medical practitioner registered with the Malaysian Medical Council to verify the parents' condition – a written declaration from the carer (excluding self, spouse or children) or a copy of the carer's work permit, together with receipts, is sufficient. Effective from YA 2027.

Medical treatment becomes "Health and Well-being"

Appendix 4 (pp. 8–9) renames the RM10,000 medical treatment relief to Health and Well-being and keeps the RM10,000 limit while expanding scope: postnatal care services from a confinement centre or qualified individual are added with a RM3,000 sub-limit, and the separate RM1,000 breastfeeding equipment relief (child aged 2 and below, paid by self or spouse) is merged into the same relief. Effective from YA 2027.

Education and Skills Training Fees

Appendix 5 (pp. 10–11) merges the RM7,000 education fees relief and the RM2,500 lifestyle upskilling relief into a single Education and Skills Training Fees relief, with the limit staying at RM7,000. New scope: courses at Certificate, Diploma, Bachelor's, Masters or Doctor of Philosophy level in any field recognised by a regulatory agency (for self); up to RM3,000 for TVET upskilling or self-enhancement courses for self or spouse recognised by the Director General of Skills Development under Act 652; and up to RM2,000 for non-employment courses (self or spouse) or STEM, arts, language and religion courses or tuition for children. Effective from YA 2027.

Lifestyle relief adds AI subscriptions and pet care

Appendix 6 (p. 12) keeps the lifestyle relief at RM2,500 but adds two categories: AI software and application subscriptions for personal use, spouse or child, and pet care costs – adoption fees from registered animal shelters and registered veterinary services for vaccination and spaying or neutering. Reading materials, newspapers, computers, smartphones, tablets and internet subscriptions continue to qualify. Effective from YA 2027.

Sports relief adds sports shoes

Appendix 7 (p. 13) allows the purchase of sports shoes up to RM300 within the existing sports-related lifestyle relief, which remains capped at RM1,000 for self, spouse, child or parents (sports equipment under the Sports Development Act 1997, facility entrance and rental fees, competition registration fees, gymnasium membership and sports training fees). Effective from YA 2027.

Tourism relief extended one year

Appendix 8 (p. 14) extends the RM1,000 relief on entrance fees to tourist attractions (museums, zoos, theme parks, national parks, marine parks, geoparks) and cultural and arts programmes for one more year, tied to Visit Malaysia Year 2026 being extended into 2027. Effective for YA 2027.

SOCSO relief: gig workers covered, plus RM150 for voluntary contributions

Appendix 9 (p. 15) extends the existing RM350 relief to cover mandatory employee contributions under the Self-Employment Social Security Scheme (LINDUNG KENDIRI) for its three mandatory sectors – passenger transport, goods or food transport, and hawkers – and adds a new RM150 relief for voluntary contributions to the Non-Employment Injury Scheme (LINDUNG 24) and the 17 non-mandatory LINDUNG KENDIRI sectors. Effective from YA 2027.

Schools: TSUWAS donation fund

Appendix 10 (p. 16) widens the scope of the School Public Contribution Fund (TSUWAS), approved under section 44(6) of the Income Tax Act 1967. Beyond student development and welfare programmes, the fund may now cover administrative and operating expenses, repairs and maintenance, equipment procurement and school programmes. Applications go to the Inland Revenue Board of Malaysia with Ministry of Education endorsement, and the fund is jointly managed by the school, PTA or Alumni Association under MOE guidelines still to be determined. Cash contributions remain deductible up to 10% of aggregate income; in-kind contributions are not deductible. Effective from YA 2027.

MSMEs and business tax changes

MSME company rates: 14% and 16%

Appendix 11 (p. 17) cuts income tax for Micro, Small and Medium Enterprises – companies with paid-up ordinary share capital of RM2.5 million or below (or LLP partnership capital contributions of RM2.5 million or below) and annual sales not exceeding RM50 million.

Small value assets: RM3,000 per asset, RM30,000 annual cap

Appendix 12 (p. 18) raises the per-asset threshold for immediate capital allowance on small value assets from RM2,000 to RM3,000, and lifts the annual aggregate claim for companies other than MSMEs from RM20,000 to RM30,000. MSMEs continue to claim without the overall cap. Effective from YA 2027.

Salary expenses deductible only if paid cashless (from YA 2028)

Appendix 14 (p. 20) is the one measure that restricts an existing deduction. From YA 2028, salary expenses are deductible under section 33 of the Income Tax Act 1967 only when paid through financial institutions or cashless payment instruments as prescribed under the Employment Act 1955. MSME salary payment transactions are exempt from this restriction, and deductions for non-salary expenses are unaffected regardless of payment method. Employers still paying salaries in cash should plan the transition before YA 2028.

Capital markets, Islamic finance and SME financing support

• Shariah-compliant fund management (Appendix 13, p. 19): the 60% statutory income exemption for resident providers approved by the Securities Commission Malaysia is fixed at 40% but extended three years – effective YA 2028 to YA 2030.
• Sukuk Prisma issuance costs (Appendix 15, p. 21): a new income tax deduction for issuance costs of Sukuk Prisma approved or authorised by, or lodged with, the Securities Commission. The existing SRI Sukuk issuance-cost deduction runs to YA 2027. Sukuk Prisma is SC's new instrument from 2027, targeting up to RM100 billion of sustainability-focused investment over five years. Effective YA 2027 to YA 2030.
• P2P financing (Appendix 21, p. 28): stamp duty remission on peer-to-peer loan agreements between MSMEs and investors, executed 1 Jan 2027 to 31 Dec 2030. The document describes remission of duty exceeding RM10, a change from the current 100% exemption that runs out on 31 Dec 2026.
• Mid-tier company supplier financing (Appendix 22, p. 29): stamp duty in excess of RM10 remitted on second-tier agreements between mid-tier companies and financial institutions for excess credit facilities given to MSMEs, from 1 Jan 2027 to 31 Dec 2030, provided MSME suppliers have fulfilled their supply contracts and are not parent, subsidiary or related companies of the mid-tier company. First-tier agreements stay at 0.5%.
• CAKNA scheme (Appendix 20, pp. 26–27): stamp duty remission above RM10 extended for CAKNA I agreements executed from 1 Jan 2029 to 31 Dec 2030, and reintroduced for CAKNA II (government contracts up to RM1.5 million) from 1 Jan 2027 to 31 Dec 2030.
• PTPTN loan repayment by employers (Appendix 30, p. 41): income tax deduction reinstated for two years for employers repaying employees' PTPTN loans from 1 Jan 2027 to 31 Dec 2028, conditional on the employer charging the employee nothing for doing so, the employee being full-time, and the employee not owning the business or having family ties with the employer.

Stamp duty and housing

First residential home: exemption now reaches RM750,000

Appendix 16 (p. 22) both extends and widens the first-home stamp duty exemption for Malaysian citizens:

• Homes priced up to RM500,000: 100% exemption on loan agreements and instruments of transfer (as today).
• Homes priced up to RM750,000: 100% exemption on the first RM500,000 of the price, and 50% exemption on the portion from RM500,001 to RM750,000.

Applies to loan agreements and instruments of transfer involving sale and purchase agreements executed from 1 January 2027 until 31 December 2030 (the current window runs to 31 December 2027).

Abandoned housing projects: 100% exemption reintroduced

Appendix 17 (p. 23) reintroduces the 100% stamp duty exemption on loan agreements and instruments of transfer for rescue contractors or developers and original buyers, for revivals certified by the Ministry of Housing and Local Government. The previous window closed on 31 December 2025; the new one runs 1 January 2027 to 31 December 2030, supporting the MADANI Housing Reform target of zero abandoned projects by 2030.

Bank account opening duty abolished

Appendix 18 (p. 24) grants a 100% exemption from the RM10 stamp duty on instruments for opening savings and current accounts that contain an undertaking creating a specific legal obligation, indemnity, guarantee or liability – for individuals and businesses. From 1 January 2027.

Foreign currency loans with banks: capped duty

Appendix 19 (p. 25) replaces open-ended 0.5% ad valorem duty with a cap on foreign currency loan or financing agreements with banks in Malaysia: RM2,000 for agreements up to RM100 million and RM5,000 above RM100 million. For agreements executed from 1 January 2027. The cap as drafted does not extend to non-bank lenders.

Business incentives and investment measures

Global Services Hub: redesigned rates plus treasury fund management

Appendix 23 (pp. 30–31) reviews the Global Services Hub (GSH) incentive for companies using Malaysia as a hub for high-value services. The proposal defines new companies (no prior GSH or Principal Hub activity) versus existing companies (previously approved, undertaking additional new services), with base income for existing companies set as the average of the last three years. The extracted rate table shows 5% for new companies, 15% for existing companies with income at or below base, and 5% for existing companies above base. The incentive period runs in five-year blocks up to a maximum of 30 years, subject to performance. Qualifying services include regional P&L or business management units, strategic business planning and corporate development, with at least two additional qualifying activities required from strategic, business (including Treasury Fund Management) or shared services.

Treasury Fund Management undertakings also receive a withholding tax exemption on interest paid to non-residents and a 100% stamp duty exemption on foreign currency loan agreements, both extended to the Johor-Singapore Special Economic Zone incentive package. Effective for applications received by MIDA from 1 January 2027.

Shipping companies: full exemption to YA 2036

Appendix 24 (pp. 32–33) continues full income tax exemption for Malaysian shipping companies subject to conditions: strategic management and effective control in Malaysia, annual operating expenditure of at least RM250,000 per Malaysian ship, and at least four Malaysian citizens per ship on an average monthly salary of RM15,000. Stamp duty on loans for purchasing or constructing Malaysian ships is capped at RM2,000 (up to RM100 million) or RM5,000 (above RM100 million), and the Labuan entity stamp duty exemption is maintained. Income tax exemption applies YA 2027 to YA 2036; the stamp duty cap applies to agreements executed from 1 January 2027.

Green technology incentive restructured

Appendix 25 (pp. 34–36) reorganises the Green Technology Tax Incentive. Under the new structure: Green Investment Tax Allowance for projects runs in two tiers – Tier 1 (green hydrogen and ocean thermal energy conversion) at 100% allowance with 100% or 70% of statutory income set off over 5+5 years; Tier 2 (electric vehicle charging stations and renewable energy systems: biomass, biogas, mini hydro, geothermal, wind) at 60% allowance, 70% set-off, 5 years. For own-consumption assets, Tier 1 remains at 100%/70% (approved vehicles, locally produced EV infrastructure, waste and water systems, renewable energy integrated systems with battery or energy storage) and Tier 2 at 60%/70%; companies must apply to MGTC within 24 months of purchasing the asset. Applications to MIDA and MGTC-verified purchases run 1 January 2027 to 31 December 2030. Solar does not appear in the new project-tier list and the GITE solar leasing table is not restated in the proposal – confirm both before relying on them.

Equity crowdfunding and angel investors extended four years

• Equity crowdfunding (Appendix 26, p. 37): the exemption equal to 50% of the investment amount (capped at RM50,000 per year, deductible up to 10% of aggregate income) continues for investments made 1 January 2027 to 31 December 2030. Existing conditions remain: SC verification, no family ties with the investee, SC-approved platform, and no disposal within two years.
• Angel investors (Appendix 27, p. 38): the exemption equivalent to the invested amount for angel investors in pre-seed and seed technology start-ups is extended four years, for investments made 1 January 2027 to 31 December 2030.

Accelerated capital allowance extended

Appendix 28 (p. 39) extends the Accelerated Capital Allowance – full claim within two years (20% initial + 40% annual allowance) on heavy machinery and plant from local manufacturers, ICT equipment and computer software packages, and consultation, licensing and incidental fees for customised software – for four years, on qualifying capital expenditure incurred 1 January 2027 to 31 December 2030.

International conferences, incentive trips and trade exhibitions

Appendix 29 (p. 40) extends the 100% statutory income exemption for MOTAC-certified organisers by three years. Current conditions – at least 1,500 foreign participants a year for incentive groups, 2,000 for conferences, 3,000 for trade exhibitions – continue to apply. The current window covers YA 2026 and 2027; the extension applies YA 2028 to YA 2030.

Indirect taxes, customs and duty-free islands

Langkawi origin goods: expanded exemption list

Appendix 31 (pp. 42–43) revises and expands the import duty exemption for goods originating from Langkawi when brought directly into the Principal Customs Area under Item 76 of the Customs Duty (Exemption) Order 2017. The new list is organised into six categories – agriculture and agro-food (including virgin coconut oil), food and beverage products (coffee products, mineral water, pineapple tarts, coconut cookies, Langkawi chocolate, curry puff, chips, buffalo milk ice cream, retort products), fisheries and marine products (anchovies, anchovy-based products, dried stingray products, downstream sea cucumber products), minerals and ornaments (handicraft, crystal products, tiffin carrier), consumer goods and home appliances (homemade soap, virgin coconut oil soap, whetstones), and forestry and construction (wood charcoal, cement, marble). From 1 January 2027. Items on the current 23-goods list that do not appear in the new list are not addressed in the document – confirm their treatment if you rely on them.

Duty-free islands: RM10,000 for Langkawi and Labuan

Appendix 32 (p. 44) raises the combined import duty and sales tax exemption for goods taken out of duty-free islands into the Principal Customs Area. For Langkawi and Labuan, the allowance becomes a single RM10,000 limit on all new goods, excluding tyres and tubes, alcoholic beverages, cigarettes, tobacco products, smoking pipes, and electronic cigarettes and vapes including liquids or gels, with the visit duration set at 48 hours. Treatment on Tioman, Pangkor and Pulau 1 (Forest City) is maintained. From 1 January 2027.

Sales tax refund for traders supplying manufacturers

Appendix 33 (p. 45) introduces a sales tax refund facility for local traders or distributors who have paid sales tax on goods supplied to manufacturers, covering machinery, spare parts and equipment under Item 55 of Schedule A and inputs for pharmaceutical products, animal feed, fertilisers and pesticides under Schedule B of the Sales Tax (Persons Exempted from Payment of Tax) Order 2018. Today those exemptions only reach manufacturers importing directly or buying from a local registered manufacturer. From 1 January 2027.

Elderly care service tax cut to 6%

Appendix 34 (p. 46) moves elderly care services out of the Wellness Centres category into a new item under Group I of the First Schedule to the Service Tax Regulations 2018, keeping the RM500,000 registration threshold but cutting the rate from 8% to 6%. Providers are exempt where the annual care fee per person is up to RM96,000 (for centres registered under the Care Centres Act 1993 or the Private Aged Healthcare Facilities and Services Act 2018); above RM96,000 per person, the 6% rate applies. From 1 January 2027.

Entertainment duty in the Federal Territories

Appendices 35 and 36 (pp. 47–49) extend entertainment duty relief. The Budget 2024 exemptions on selected categories (currently running to 31 December 2028) are extended until 31 December 2030, and a 100% exemption is introduced for four years on tickets for local film screenings and local theatre performances in the Federal Territories, for applications received by the Ministry of Finance from 1 January 2027 to 31 December 2030 (Appendix 35). Separately, entertainment duty exemption is extended to Stadium Merdeka and Stadium Negara for arts, cultural, entertainment and sports activities, alongside the existing approved facilities (Bukit Jalil National Sports Complex, Juara Stadium, Istana Budaya, National Art Gallery, Dewan Filharmonik PETRONAS) (Appendix 36). From 1 January 2027 for the facility exemptions. The base entertainment duty rate remains 25%.

Effective dates at a glance

Two dates matter most in practice: personal reliefs and rate changes flow through payroll and e-filing for YA 2027 (year ending 31 December 2027), while stamp duty changes attach to documents executed on or after 1 January 2027, not to the property purchase date alone.

Frequently asked questions

Have these tax changes been passed into law?

No – not on the basis of this document. Each measure is presented as a proposal with a stated effective date. Enactment depends on the relevant income tax amendments, regulations or exemption orders being tabled and gazetted. This article flags every measure as proposed; re-check status before acting.

What is the single biggest change for individuals?

Two compete: the restructured rate table (Appendix 1) that cuts one point off the RM70,001–150,000 bands but starts the 30% top rate at RM1 million instead of RM2 million, and the RM3,000 increase in basic personal relief to RM12,000 (Appendix 2). Middle-income earners gain from both; taxpayers with chargeable income above RM1 million pay more on the excess.

Do the new relief limits replace or add to the old ones?

Most are reclassifications, not new pots of money. The Health and Well-being relief stays at RM10,000 (postnatal and breastfeeding carve-outs sit within it), Education and Skills Training Fees stays at RM7,000 (with RM3,000 and RM2,000 sub-limits), lifestyle stays at RM2,500, sports stays at RM1,000 with sports shoes within it, and the SOCSO relief stays at RM350 with the new RM150 as an additional, separate relief.

Which measures use calendar dates instead of years of assessment?

Stamp duty measures (Appendices 16–22), incentives and investment windows (Appendices 23–28, 30), customs and indirect tax changes (Appendices 31–34) and entertainment duty exemptions (Appendices 35–36) all run on calendar dates – usually tied to when an agreement is executed or an application is received. Only the personal and company tax changes (Appendices 1–15) and the MICE exemption (Appendix 29) run by year of assessment.

Which single measure could catch businesses out?

Appendix 14: from YA 2028, salary expenses lose their deduction unless paid through a bank or approved cashless instrument. MSMEs are carved out, but larger employers still paying wages in cash have roughly a year to change payroll processes.

Before you act on any measure

Confirm the current legal status of each proposal, check that your own facts meet the stated conditions (paid-up capital, sales thresholds, registration with a particular body, certification, minimum headcount or salary levels), and note that several measures depend on guidelines still to be issued – the TSUWAS guidelines, for example, are expressly "to be determined". Where a measure depends on an application to MIDA, MGTC, the Securities Commission, MOTAC, the Ministry of Housing and Local Government or the Inland Revenue Board, the application date, not the announcement date, governs eligibility.