We unpack Malaysia’s 2026 National Budget and its implications for the business community with Farah Rosley, Malaysia Tax Managing Partner at Ernst & Young Tax Consultants.

The continuity in the Budget 2026 reinforces fiscal consolidation and economic resilience, with a strong focus on strengthening existing tax frameworks, targeted incentives, and continued subsidy rationalisation. Key highlights include:

• A reduced fiscal deficit target of 3.5% of GDP, signaling continued fiscal discipline.

• Subsidy rationalisation measures, including the capping of RON95 petrol, contributing to a total expected savings of RM15.5 billion.

• Strengthened tax collection through the nationwide rollout of e-invoicing by mid-2026 and a new stamp duty self-assessment system.

• A new outcome-based incentive framework for corporate tax, linking financial support to measurable outcomes like employment and technology transfer.

  Key targeted incentives for businesses, including:

  • An expanded RM1.5 million tax deduction on listing expenses for the energy, utility, and technology sectors.

  • An accelerated capital allowance to promote domestic direct investment and digital technology adoption.

  • A 10-year tax exemption for domestic sales from food security projects.

• Support for regional integration through initiatives like the Johor-Singapore Special Economic Zone and the ASEAN Business Entity Framework.

• A continued focus on sustainability, with enhanced green technology incentives and the impending introduction of a carbon tax.

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