Key facts
- Malaysia plans to cut income tax for individuals and smaller businesses.
- The monthly minimum wage will rise to RM2,000 from RM1,700 starting June 2027.
- Individual income tax relief will increase to RM12,000 from RM9,000.
- The tax rate for income between RM70,000 and RM150,000 will be reduced.
- Income tax for those earning over RM1 million will be unified at 30%.
- The 2027 budget proposes RM459.8 billion in spending, a record for Malaysia.
Malaysia's Prime Minister Anwar Ibrahim announced a budget on Friday that includes income tax cuts for individuals and smaller businesses, alongside an increase in the minimum wage, as the country approaches its next general election. The proposed spending for 2027 totals RM459.8 billion, a record for Malaysia and nearly 10% more than the 2026 budget.
Anwar highlighted cost of living as a primary concern, announcing that allocations for subsidies, aid, and incentives would exceed RM80 billion. This includes RM16 billion in cash aid for 13 million Malaysians. Individual income tax relief will be raised from RM9,000 to RM12,000, and tax rates for taxable income between RM70,000 and RM150,000 will be reduced, potentially saving around five million taxpayers up to RM1,600 each. However, the tax rate for income exceeding RM1 million will be unified at 30%.
The monthly minimum wage is set to increase to RM2,000 from RM1,700 starting in June 2027 for businesses with annual revenue exceeding RM50 million, benefiting approximately four million workers. Additionally, civil servants outside top pay grades will receive a RM1,500 bonus, and retirees will get RM750.
Analysts suggest the budget's timing and increased spending signal a push to boost the economy ahead of the general election, which must be held by February 2028. The government projects economic growth to moderate between 4.2% and 5.2% in 2027, while the fiscal deficit is expected to decrease to 3.3% of GDP.