Kuala Lumpur:Budget 2027 is anticipated to redirect savings from subsidy reforms and increased revenue back to the public and businesses while maintaining fiscal discipline, according to PwC Malaysia.

According to BERNAMA News Agency, PwC Malaysia tax leader Steve Chia highlighted that the additional revenue would support tax cuts, despite fuel subsidies remaining high at RM40 billion due to ongoing geopolitical uncertainties. Federal revenue for 2026 is projected at RM363.6 billion, surpassing the original estimate of RM343.1 billion, with expectations to rise further to RM380.8 billion in 2027. Relief measures are mainly aimed at the middle-income segment and small and medium enterprises (SMEs), while the tax rate for individuals earning over RM1 million is adjusted to 30 percent.

A key feature of the budget is the enhanced Global Services Hub incentive, providing a five percent special tax rate for up to 30 years, which is significantly longer than existing options. This incentive is designed to offer certainty for regional headquarters, shared services, and treasury centers considering Malaysia as their location.

Wong and Partners described Budget 2027 as supportive of investment and productivity, with significant direct tax benefits for micro, small, and medium enterprises (MSMEs), strategic investors, and companies investing in automation, digitalization, and green assets. The proposal to allow manufacturers to reclaim sales tax on machinery, spare parts, and equipment from local traders is a standout feature, aiming to reduce the cascading effect of sales tax and encourage local purchases.

The sales tax refund facility will also cover raw materials used in manufacturing pharmaceuticals, animal feed, fertilizers, and pesticides, facilitating supply chain efficiency and promoting local business engagement.