Kuala lumpur: Budget 2026 reinforces the government’s commitment to strengthening tax governance and anti-leakage measures, reflecting continued efforts to enhance fiscal transparency and enforcement, said PwC Malaysia.

According to BERNAMA News Agency, PwC Malaysia tax leader Steve Chia emphasized that the focus on governance and enforcement builds on reforms introduced in previous years, such as the Tax Identification Number (TIN), e-Invoicing pilot, and consolidation of tax administration.

Chia noted that the government’s approach in Budget 2026 is more assertive, sending a clear message that while voluntary compliance is encouraged, enforcement remains decisive. Regarding the carbon tax, Chia highlighted the need for clear definitions, predictable rates, and robust reporting to drive low-emission investments, aligning with the National Carbon Market Policy and the forthcoming National Climate Change Bill.

Meanwhile, Deloitte Malaysia tax and legal leader Sim Kwang Gek commented on the limited details regarding the carbon tax’s implementation mechanism in Budget 2026. She noted that the government seems to be refining the policy to avoid overburdening businesses. Gek welcomed the RM50 million Carbon Border Adjustment Readiness Fund, which aims to help exporters comply with the European Union (EU) and the United Kingdom’s carbon border measures, considering it timely ahead of the EU’s Carbon Border Adjustment Mechanism (CBAM) rollout in January 2026.

At the household level, Chia praised the expansion of the RM2,500 individual tax relief to include food waste grinders, as it promotes greener behavior. Additionally, the Associated Chinese Chambers of Commerce and Industry of Malaysia’s (ACCCIM) president, Datuk Ng Yih Pyng, expressed relief that Budget 2026 does not propose new taxes, considering the high operating costs and weak demand faced by micro, small, and medium enterprises (MSMEs).

Ng acknowledged the government’s acceptance of several ACCCIM proposals, including the Market Development Grant (MDG), green energy, agriculture investment, property, and Accelerated Capital Allowance (ACA). He suggested considering a special tax rate for small and medium enterprises (SMEs) showing significant export growth. Ng also proposed increasing the lifetime cap of the MDG to RM500,000, with a higher per-claim ceiling for international and local trade fairs and exhibitions.

However, Ng pointed out that Budget 2026 did not increase the taxable income threshold for SMEs enjoying a preferential income tax rate of 15 percent, currently set on the first RM150,000 of taxable income. He argued that a higher threshold would ease the financial burdens of SMEs and provide more savings for business spending.