The budget outlines a total spend of approximately RM470 billion and aims to tighten the fiscal deficit to 3.5% of GDP. Key focus areas include supporting Visit Malaysia Year 2026, attracting investment, accelerating green and digital adoption, and maintaining social support programs.
Corporate & Business Tax
- The tax exemption on foreign-sourced dividend income and gains from the disposal of foreign capital assets is extended until December 31, 2030.
- A new outcome-based investment incentive framework will have a full rollout for manufacturing in Q1 2026 and for services in Q2 2026.
- The revised Venture Capital (VC) regime provides an incentive for 10 years if a VCC obtains its certification from the Securities Commission by December 31, 2035. This requires a minimum of 20% in local investments , and dividends paid to first-level individual shareholders are tax-exempt for the period.
- Accelerated Capital Allowances (ACA) are available for qualifying capital expenditure on assets acquired from October 11, 2025, to December 31, 2026.
- The Tax Incentive for Food Security Projects offers a 100% income tax exemption for 10 years on new projects and 5 years for expansion projects. Applications are open from January 1, 2026, to December 31, 2030.
- The tax deduction for listing expenses (up to RM1.5m) for technology-based companies and MSMEs is extended for YA2026–YA2030.
- A tax deduction of up to RM500,000 is available for tourism operators for renovation expenditure incurred between October 11, 2025, and December 31, 2027.
- Tour operators can receive a 100% tax exemption on incremental income from inbound tour packages for YA 2026 & 2027.
- Organizers of international conferences and trade exhibitions are eligible for a 100% tax exemption on statutory income.
- A special tax deduction equal to 10% of qualifying expenses (capped at RM10 million) is provided for the conversion of commercial buildings to residential premises.
- A tax exemption is proposed for the income of Hospital Welfare Funds.
Personal Tax
- A new 2% tax will be imposed on profit distributions from LLPs to individual partners where annual distributions exceed RM100,000, effective YA2026. The purpose is to align this treatment with the 2% tax on dividends.
- The RM1,000 relief for vaccinations is broadened to cover all vaccines approved by the Ministry of Health.
- The RM3,000 life insurance/takaful relief is expanded to include coverage for children.
- The tax relief for early intervention and rehabilitation for children with learning disabilities is increased from RM6,000 to RM10,000.
- The existing RM2,500 lifestyle relief is expanded to include household food waste grinders and CCTV for home use.
- A special RM1,000 tax relief is introduced for entrance fees to local tourist attractions and cultural programs for YA2026 only.
Indirect Taxes & Duties
- From January 1, 2026, sales tax and customs duty exemptions in Langkawi and Labuan will be limited to vehicles with a value of RM300,000 or less (pre-tax value).
- Excise duty rates for cigarettes and tobacco products will be increased in phases, effective November 1, 2025.
- The Royal Malaysian Customs Department plans to introduce digital tax stamps and a Centralised Screening Complex to strengthen monitoring at entry points.
New Structural Policies
- The government has reiterated its intention to introduce a Carbon Tax in 2026.
- Measures to attract skilled talent, such as an Investor Pass and ASEAN Business Entity (ABE) status, will be introduced for priority sectors.
- The Forest City Special Financial Zone will be developed as a financial services hub to attract family offices.
Social & Employer Incentives
- Further tax deductions for employers hiring senior citizens, ex-convicts, and other vulnerable groups have been extended from YA2026 to YA2030.
- The double deduction for companies sponsoring scholarships is extended to 2030, and the qualifying household income threshold for students is raised from RM10,000 to RM15,000 per month.
- The double deduction for sponsoring training for persons with disabilities is expanded to include sponsoring training for care workers for YA2026–YA2027.