Malaysia: Budget 2026

Some of the key changes are as follows:

• Exemption on qualifying foreign-sourced income received in Malaysia is extended until 31 December 2030
• 2% income tax on chargeable income from profit distribution from a Limited Liability Partnership (LLP) exceeding RM100,000 per year
• New investment incentive framework (outcome-based) will be fully implemented for the manufacturing sector starting in the first quarter of 2026, followed by the services sector in the second quarter of 2026
• Contributions for Integrity and Anti-Corruption Programs are eligible for income tax deduction
• 100% Investment Tax Allowance (ITA) be granted to companies on capital expenditure incurred for green technology products made locally with the MyHIJAU mark
• Accelerated Capital Allowance (ACA) on the procurement of plant, heavy, and general machinery acquired from local manufacturers, ICT equipment and computer software or customized computer software development
• ACA on expenditure for purchasing Speed Limitation Device (SLD) up to RM4,000 per unit, subject to conditions
• Income tax deduction on the qualifying listing costs of up to RM1.5 million incurred for listing in the Bursa Malaysia’s Main Market, ACE Market, and LEAP Market by technology-based companies and MSMEs, be expanded to MSMEs in the energy and utilities sectors, and extended to the year of assessment 2030
• Deduction for investment in subsidiary companies undertaking commercialization of non-resource-based R&D findings extended 5 years for applications received by MIDA from 1 January 2026 until 31 December 2030
• Tax deduction on qualifying expenditure for renovation and refurbishment works undertaken by tourism project operators registered with MOTAC, up to a maximum of RM500,000
• Tour operators be given 100% tax exemption on the incremental income derived from inbound tourism packages, subject to conditions
• Special income tax deduction for modification and conversion of commercial buildings to residential promises
• Removal of tax exemption for luxury cars with a value exceeding RM300,000 imported into Langkawi and Labuan
• Increase in excise duty rate on tobacco products
• Increase in excise duty rate for alcoholic beverages
• Carbon tax shall be introduced with an initial focus on the iron, steel and energy sectors in Malaysia by the year 2026

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Reference/Citation
Official Portal of Ministry of Finance Malaysia www.mof.gov.my