Malaysia’s 2026 Tax Budget highlights

11 October 2025 | Accounting and reporting | Income tax

The Prime Minister and Minister of Finance, YAB Dato’ Seri Anwar bin Ibrahim announced Malaysia’s 2026 Budget on 10 October 2025, with the theme “Belanjawan MADANI Keempat: Belanjawan Rakyat”. 

The Budget aims to attract and maintain high-value investments, accelerate digital and green transformation, and enhance the well-being of the rakyat through targeted reforms and social protection measures.

Some of the tax highlights are set out below:

Corporate income tax 

  • Expanding the tax exemption on income received from outside Malaysia 
  • Expanding the income tax deduction for costs of listing on Bursa Malaysia 
  • Extending the income tax exemption for social enterprises 
  • Extending the income tax exemption on the Sustainable and Responsible Investment sukuk and Bond Grant Scheme 
  • Expanding the income tax deduction on contributions for integrity and anti-corruption programmes or activities 
  • Enhancing the tax treatment for public university teaching hospitals’ endowment funds 
  • Expanding the accelerated capital allowance on capital expenditure for plant, machinery and equipment 
  • Enhancing the tax incentive for food security projects 
  • Expanding the tax incentive for automation in the agriculture sector 
  • Introducing tax incentive for training in artificial intelligence 
  • Extending tax incentive for commercialisation of research and development findings 
  • Introducing tax incentive for tour operators 
  • Introducing tax deduction on costs of renovation and refurbishment for tourism projects 
  • Extending the tax incentive for organising international incentive trips, conferences and trade exhibitions 
  • Extending and enhancing the tax incentive for organising arts, cultural, sports and recreational activities 
  • Extending the tax incentive for venture capital 
  • Extending the tax incentive for scholarships 
  • Expanding the scope of tax incentive for training of care workers 
  • Extending and expanding the scope of tax incentive for employing vulnerable persons 
  • Extending the tax incentive for employing senior citizens
  • Expanding the scope of capital allowance on the cost of purchasing speed-limitation devices for heavy vehicles 

Individual tax

  • Expanding the scope of income tax relief for vaccination expenses for self, spouse or children 
  • Expanding the scope of income tax relief for childcare or kindergarten fees 
  • Increasing the income tax relief limit for expenses on early intervention programmes or rehabilitation treatment for children with learning disabilities 
  • Expanding the scope of income tax relief for life insurance premiums or takaful contributions for self and spouse 
  • Introducing special income tax relief on expenses for tourist attractions and cultural programmes
  • Expanding the scope of income tax relief on expenses for electric vehicle charging facilities and food composting machines 
  • Introducing income tax on profit distributions received by partners in a limited liability partnership

Indirect tax

  • Increasing the excise duty rate on heated tobacco products
  • Enhancing the import duty and sales tax exemption on Nicotine Replacement Therapy products
  • Increasing the excise duty rate on alcoholic beverages 
  • Extending the excise duty and sales tax exemption for the purchase of new national cars by taxi drivers and private hire cars owners 
  • Increasing the excise duty rate on cigarettes 
  • Increasing the excise duty rate on heated tobacco products

Stamp duty

  • Increasing stamp duty on property ownership by non-citizens
  • Extending stamp duty exemption for the purchase of a first residential home
  • Extending stamp duty exemption for Perlindungan Tenang products
  • Extending stamp duty exemption on insurance policies or takaful certificates with low annual premium or contribution
  • Exempting stamp duty on contract notes for buy-side transactions of structured warrants
  • Extending stamp duty exemption on contract notes for Exchange Traded Funds listed on Bursa Malaysia
  • Increasing the wage threshold for stamp duty exemption on employment contracts

Source: Belanjawan 2026 speech, Ministry of Finance website, 10 October 2025, accessed 10 October 2025.