Budget 2026：The people’s budget

Friday, 10 October 2025 marks the unveiling of Malaysia’s Budget 2026 by the Prime Minister and Finance Minister, YAB Dato’ Seri Anwar bin Ibrahim.  

The 2026 Budget, themed “The People’s Budget”, reflects the Government’s continued focus on inclusivity, resilience, and shared prosperity under the Ekonomi MADANI Framework. It emphasizes good governance, fiscal prudence, and strategic transformation — aimed at raising the ceiling of national growth while lifting the floor of living standards for all Malaysians.  

A total allocation of RM470 billion has been announced, comprising RM338.2 billion for operating expenditure, RM81 billion for development expenditure, and RM50.8 billion for investments by government-linked entities and public-private partnerships. Despite global uncertainties, Malaysia remains on track to narrow its fiscal deficit to 3.5% of GDP, supported by strong revenue performance.  

Budget 2026 outlines key national priorities, reflecting the Government’s focus on upholding governance, supporting the rakyat’s welfare, spurring high-value industries, strengthening national resilience, and fostering equitable opportunities across all segments of society.  

Rather than introducing new taxes, the Government has chosen to broaden the tax base progressively while ensuring fairness in the tax system. Key tax measures reflect a strategic shift toward long-term sustainability, digitalization, and competitiveness.  

Notable Proposals: 

• A 2% tax on profit distributions exceeding RM100,000 per annum received by partners in limited liability partnerships.  

• Tax incentives to promote automation, artificial intelligence training, and sustainable investments.  

• Enhanced venture capital incentives, with a 10-year preferential tax rate to stimulate start-up and innovation ecosystems.  

• Expanded tourism-related incentives, including tax deductions for renovation and refurbishment of tourism premises, and exemptions for international events and sports activities.  

The Budget also reinforces Malaysia’s commitment to social equity, with measures targeting childcare support, healthcare reforms, and labour market improvements, alongside initiatives to bridge the urban-rural divide and empower vulnerable communities.  

From our perspective, Budget 2026 demonstrates a prudent yet forward-looking fiscal approach. It strikes a balance between strengthening the nation’s resilience and catalyzing growth in high-value sectors. The focus on sustainability, technological advancement, and inclusive development reflects a maturing economic strategy — one that positions Malaysia to navigate global challenges while ensuring that economic progress remains people-centric and equitable.  

Overall, Budget 2026 represents a decisive step towards building a compassionate, competitive, and future-ready Malaysia. It reflects a Government that listens, empowers, and modernizes — driving sustainable progress while ensuring that no Malaysian is left behind.  

Should you have any queries relating to this summary or any tax related matters, please contact your ECOVIS Malaysia consultants or send us an email at kuala-lumpur@ecovis.com.my.