Budget 2027

Fiscal position

4.7%

Increase in revenue in 2027

3.6%

Increase in overall expenditure in 2026

-3.3%

Budget deficit, % of GDP in 2027

63.7%

Federal Government debt,
% of GDP expected in 2027

The deficit narrows for the fifth straight year, from 5.5% of GDP in 2022 to 3.3% in 2027, keeping the Government on track for its 3% target by 2028.

Taxes

Lower tax for MSMEs​

Micro, small, and medium enterprises (MSMEs) income tax rate cut by one percentage point: 14% on the first RM150,000, 16% on RM150,001-RM600,000. Up to RM6,000 more income for 300,000 MSMEs

Middle-income tax cut

Individual relief limit raised from RM9,000 to RM12,000 and resident tax rates cut by one percentage point, adding up to RM1,600 in disposable income for about five million taxpayers

Higher rate for top earners

Chargeable income above RM1 mn taxed at 30%

Capital allowances extended

Accelerated Capital Allowance for local plant, machinery, information and communications technology (ICT) equipment and software extended to 31 December 2030

HGHV industries​

RM25 bn domestic investment push
GLICs mobilise RM25 bn through GEAR-uP, including a RM1.25 bn New Economy Venture Fund for data centres and logistics in Elmina

RM7 bn for strategic sectors
Bank Pembangunan Malaysia Berhad (BPMB) Group finances seven strategic sectors, including renewable energy, logistics, aerospace, and semiconductors

RM1.2 bn for local chip firms, RM450 mn for startups
Khazanah and Kumpulan Wang Persaraan (KWAP) lift local chip firms into higher value segments; Jelawang Capital, Dana Perintis and Malaysian Technology Development Corporation (MTDC)'s SemiConStart back startups

RM8 bn for TVET
Cross-ministry Technical and Vocational Education and Training (TVET) funding, including RM3 bn through HRD Corp for three million training places; Bakat MADANI targets 30,000 jobs

Strategic sectors

Penang as technology finance centre
RM100 mn Strategic Investment Fund by Khazanah and InvestPenang for early-stage semiconductor and advanced manufacturing firms

JS-SEZ master plan
Master plan and blueprint launch by year-end; Nexus Sedenak targets RM12 bn in investment and 45,000 jobs

RM2.1 bn for mid-tier companies
New Industrial Master Plan (NIMP) Fund, Dana Pemacu and the Mid-Tier Company (MTC) Fund build capabilities in electrical and electronics (E&E), digital, aerospace, and medical devices

Regional automotive hub in Perak
Automotive Hi-Tech Valley in Tanjong Malim is raised to a regional hub, with a tax deduction of up to RM5 mn on relocation costs for wholly-locally-owned vendors

Sibu Special Economic Zone
Formal Federal-Sarawak talks begin on the incentive framework, a one-stop investment centre, and infrastructure requirements

Tax incentives

Lower tax for regional hubs
A 5% special tax rate for new companies running regional and global services under the Global Services Hub incentive, with incentive periods of up to 30 years

Zero tax for family offices
Single family offices in Forest City pay zero tax on qualifying income for up to 20 years; a multi-family office model will be introduced

Talent mobility
Spouses of Category I Employment Pass holders may work from 1 January 2027; MyABE companies get Employment Pass approvals in five working days

Shariah fund management
40% income tax exemption for Shariah-compliant fund managers from YA2028 to YA2030

Healthcare

Budget allocation
RM47.7 bn for the Ministry of Health in 2027, up from RM46.5 bn in 2026

Affordable health protection
MediAsas launches in January 2027, with hospital charges based on diagnosis and treatment to keep costs predictable. SMEs with fewer than 75 employees get a RM200 first-year premium subsidy per employee, for up to 50 employees

Transparent private healthcare costs
From 2027, private hospitals will adopt standardised billing categories, helping patients understand treatment costs and reducing price inconsistencies

Electronic medical records (EMR)
Malaysian Communications and Multimedia Commission (MCMC)’s RM1 bn investment continues the nationwide rollout of EMR, built on a one-individual, one-record principle

Property

Wider stamp duty exemption
Full exemption for first homes up to RM500,000. For homes up to RM750,000, full exemption on the first RM500,000 and 50% on the balance. Applies to SPAs from 1 January 2027 to 31 December 2030

Reviving abandoned projects
Full stamp duty exemption for rescuing developers and original purchasers between 1 January 2027 to 31 December 2030, towards zero abandoned projects by 2030

RM20 bn housing guarantees
Skim Jaminan Kredit Perumahan (SJKP) guarantees help for 80,000 first-time buyers, especially those who are self-employed without a fixed income

Enhance urban liveability
DBKL to allocate RM400 mn for new green spaces and park restoration, and the gazettement of a 100-acre Federal Park in Bukit Kiara

AI and digital trust

Sovereign AI Cloud
Keeps the rakyat’s data and strategic national information under Malaysian control

Post-quantum readiness
Rated Tier 1; National Cyber Security Agency (NACSA) and MCMC to develop local quantum-safe data protection

AI for MSMEs
RM30 mn MDEC fund helps 4,000 MSMEs adopt AI and certifies 5,000 AI professionals

Sabah and Sarawak

Highest Federal allocations
Sabah receives RM18.7 bn and Sarawak RM16.2 bn in 2027

Special Grant tripled
Interim rate now totals RM1.5 bn, settled before year-end

RM3.3 bn for roads
Trans-Borneo Highway, Sarawak-Sabah Link Road 1 and Pan Borneo Sabah Phase 1B continue