2027 Budget Slashes SME Income Tax by One Percentage Point

During the 2027 budget presentation in Kuala Lumpur, Prime Minister Datuk Seri Anwar Ibrahim outlined a tax reform that cuts the income tax rate for SMEs by one percentage point, setting the rate at 14% for the first RM150,000 of taxable income and 16% for income between RM150,000 and RM600,000. He said the adjustment could provide as much as RM6,000 extra to each of the 300,000 micro, small and medium enterprises. The budget also raises the value limit for small assets eligible for capital allowance to RM3,000 and lifts the overall claim cap for non-MSME firms to RM30,000.

Manufacturers will be allowed to reclaim sales tax on locally sourced machinery and parts, while accelerated capital allowances for domestic plant, machinery, ICT equipment and software are extended to 31 December 2030. Stamp duties on certain credit-facility agreements and peer-to-peer financing contracts will be reduced to RM10, and opening of savings or current accounts will be exempt from stamp duty from 1 January 2027.