Key fiscal measures for Budget 2026
The Malaysian Reserve, 26 September 2025
(pic: Bloomberg)
THE proposed Budget 2026, to be presented to Parliament on Oct 10, will be the fourth budget under the Madani administration and the first to be aligned with the goals of the 13th Malaysia Plan (MP13) for 2026-2030.
The budget is expected to underscore a dual focus: Reinforcing the resilience of Malaysia’s economy and enhancing the wellbeing of the people amid mounting global uncertainties, according to a note released by OUB Group.
“While no new broad-based tax is expected, selective expansion in indirect taxes (eg sin tax, stamp duty) are possible and carbon tax is coming in 2026. The revenue gains would be offset by higher spending to ease cost-of-living pressures,” it said.
Based on channel checks and news, the report identified key fiscal measures that may be announced. They are listed below.
Tax & Compliance Enhancements
E-invoicing rollout continues in phases (January & July 2026), with exemptions for businesses earning ≤RM500,000.
Stamp duty on employment contracts (RM10 per contract) will be fully enforced from January 2026, impacting firms with high hiring volumes.
Carbon tax is introduced, targeting iron, steel and energy sectors as part of Malaysia’s energy transition.
Higher sin taxes: Incremental excise hikes on cigarettes, alcohol and vape products to support public health goals.
Adjustments or targeted reliefs may be introduced to ease SST compliance and address industry-specific concerns eg business-to-business (B2B) exemptions.
Investment & Industrial Policy
Launch of New Investment Incentive Framework (NIIF): Outcome-based incentives, prioritising high-growth, high-value (HGHV) sectors (eg semiconductors, energy transition, halal industry) with emphasis on building resilient local ecosystems.
Labour Market & Social Protection
Progressive wage policy is likely to be expanded beyond five sectors, which will remain voluntary participation with cash incentives for employers.
Multi-Tier Levy Mechanism (MTLM) to reduce reliance on foreign labour, supporting MP13 targets. It is expected to charge based on the number of foreign workers.
Retirement age may be raised to 65 (from the current 60), alongside potential long-term care insurance or tiered health subsidies for middle 40% income group (M40).
Public Sector Welfare
One-off special financial assistance (RM700 for civil servants Grade 56 & below; RM350 for pensioners), or possibly a half-month bonus.
Second phase of civil service salary adjustment in January 2026 (3% or 7% increase by category).
Cost-of-Living & Social Support
Sumbangan Asas Rahmah (SARA) cash aid may increase by RM50-RM100 to support 5.4 million eligible recipients.
Continued subsidies for RON95 petrol (RM1.99 per litre for 90% of Malaysians) with quotas, rice, cooking oil and liquefied petroleum gas (LPG). Some 100,000 goods and public land transport company vehicles are eligible for RON95 subsidies.
Housing & Urban Development
Launch of Home Ownership Campaign 3.0 (HOC 3.0) with extended stamp duty exemptions, higher eligible property price and possible reintroduction of Developer Interest-Bearing Scheme (DIBS) for properties ≤RM700,000.
Expansion of affordable housing schemes — Rent-to-Own (RTO) and Housing Credit Guarantee Scheme (SJKP) — to informal income earners.
Incentives for developers to adopt Build-then-Sell (BTS) model.
Business Support & ESG Transition
Continuation of microcredit and financing facilities, including Syarikat Jaminan Pembiayaan Perniagaan Bhd guarantees and matching grants for strategic sectors.
Support for automation, digitalisation and environmental, social and governance (ESG) adoption amid global trade and tariff risks.
Support for micro, small, and medium enterprises (MSMEs) and start-ups under Made by Malaysia branding.
Governance & Institutional Reform
New legislation to enhance transparency: Ombudsman Act and Freedom of Information Act, following the Government Procurement Act passed in September 2025.
Education, Healthcare & Community Empowerment
Additional allocations for Technical and Vocational Education and Training (TVET) and high-skilled talent development in tech sectors.
Expanded investment in public healthcare infrastructure, telemedicine and affordable medicine access.
Community-focused initiatives: Childcare facilities, flexible work arrangements for women and Bumiputera participation in strategic sectors.
Financial Market Development
Potential incentives for banks and asset managers to adopt tokenisation technologies and act as counterparties to tokenised products.
Government may support infrastructure providers and fintech firms to build secure, scalable tokenisation platforms. — TMR
(Web Source: https://themalaysianreserve.com/2025/09/26/key-fiscal-measures-for-budget-2026/)