Malaysia: Proposed tax measures in 2027 budget
Including reduction in service tax rate on elderly care services from 8% to 6%, effective January 1, 2027
October 13, 2026
The government on October 9, 2026, presented the 2027 budget, which includes the following proposed tax measures:
- Reduction in corporate income tax rates for micro, small, and medium enterprises (MSMEs) by 1% for the first RM600,000 of chargeable income, beginning from tax year 2027
- Expanded tax relief for medical expenses, lifestyle expenses, and sports equipment, including new allowances for AI software subscriptions, beginning from tax year 2027
- Decrease in Shariah-compliant fund management tax incentive exemption rate for resident companies from 60% to 40% of statutory income, and extension of exemption for three years from tax year 2028 to tax year 2030
- Reduction in service tax rate on elderly care services from 8% to 6%, effective January 1, 2027
- Increase in purchase limit for goods eligible for import duty and sales tax exemption for visitors in Langkawi and Labuan to RM10,000 (subject to a minimum stay of 48 hours), effective January 1, 2027
Read an October 2026 report prepared by the KPMG member firm in Malaysia