Malaysia´s Budget 2026

Malaysia´s Budget 2026 builds upon the momentum established under Budget 2025, continuing Malaysia’s pursuit of stronger economic fundamentals and sustainable resilience. Anchored in the MADANI Economy framework, the Budget focuses on three key pillars – strengthening reform and governance, expanding national growth potential, and enhancing the living standards of the rakyat.

Tabled on 10 October 2025 by the Prime Minister, Dato’ Seri Anwar Ibrahim, Malaysia´s Budget 2026 marks the first fiscal year of the 13th Malaysia Plan (“13MP”) 2026 – 2030.

While the 13MP outlines Malaysia’s long-term aspiration to position itself among the world’s top 12 most competitive economies, Budget 2026 narrows its focus on high-growth sectors, digital expansion, and in-clusive, sustainable progress. It aims to balance short-term support for the rakyat with long-term structural reforms to build a more resilient, competitive, and future-ready nation.

Underpinned by the MADANI Economy principles, Budget 2026 introduces a series of targeted tax reforms, closure of tax loopholes, and incentives for the green and digital economies. It also encourages strategic investments and skills development to support Malaysia’s transition towards a more innovative and sustainable economy. For businesses, there initiatives are designed to foster innovation, sustainability, and regional expansion opportunities.

Some key tax measures are as follows:

The exemption on qualifying foreign-sourced income remitted to Malaysia will be extended until 31 December 2030.
The childcare fee relief will be extended to registered childcare centres for children up to 12 years, alongside relief for life insurance premiums or takaful contribution for children, effective from Year of Assessment (“YA”) 2026.
Eligible tourism operators will enjoy a 100 % income tax exemption on incremental income for YA 2026 and YA 2027, in support of Visit Malaysia Year 2026.
Profit distributions to individual Limited Liability Partnership (“LLP”) partners exceeding RM100,000 will be subject to tax at rate of 2 % effective from YA 2026.
A 50 % additional tax deduction will be granted on qualifying expenditure for Artificial Intelligence (“AI”)-related training, once every two years, subject to specified condition. The incentive applies to applications received between 1 January 2026 and 31 December 2027.
The wage threshold for stamp duty exemption on employment contracts will be increased from RM300 to RM3,000 per month. This will be effective for employment contracts executed from 1 January 2026.
Under the New Investment Incentive Framework, implementation will commence with the manufacturing sector in the first quarter of 2026, followed by the services sector in the second quarter of 2026.