This article first appeared in Forum, The Edge Malaysia Weekly on September 28, 2026 - October 4, 2026

The release of the Pre-Budget Statement 2027 was a welcome and encouraging development. It reflects the government’s continued commitment to transparency, accountability and stakeholder engagement in shaping the nation’s fiscal priorities.

The key themes outlined in the statement, including cost of living, social protection, governance, digital transformation and high-value investments, demonstrate a clear recognition that Malaysia’s future success must be built on a foundation that is both economically sound and socially inclusive.

The government has also recognised that fiscal responsibility and the well-being of Malaysians must progress hand in hand. These should not be viewed as competing priorities. A financially sustainable nation is ultimately one that creates opportunities, enhances living standards and provides citizens with greater confidence about their future.

The country has made positive progress in restoring fiscal resilience, strengthening governance and enhancing investor confidence. As these reforms continue, it is equally important that the benefits of economic growth are felt meaningfully by households and businesses across the country. The true success of economic policy lies in translating sound macroeconomic indicators into a positive impact on people’s daily lives.

From a tax policy perspective, Budget 2027 presents an opportunity to provide more targeted support to middle-income Malaysians.

While assistance for lower-income households remains essential, many middle-income families today are facing increasing financial pressures. Rising healthcare costs, childcare expenses, educational commitments and housing obligations continue to place significant strain on household finances. At the same time, many find themselves part of the “sandwich generation”, supporting both their children and their ageing parents.

These challenges are likely to become even more pronounced as Malaysia transitions towards an ageing society, increasing both caregiving responsibilities and financial demands on working families.

Against this backdrop, targeted tax measures can play a meaningful role in easing financial burdens while encouraging responsible long-term planning. Enhanced reliefs for elderly parent care, long-term healthcare expenditure, childcare costs and retirement savings would provide practical support to families while remaining consistent with the government’s fiscal objectives.

Such measures are not merely tax incentives. They represent an investment in social resilience that recognises the evolving realities faced by Malaysian households and help strengthen financial security across generations.

The government’s focus on strengthening social protection is both timely and necessary.

As Malaysians live longer and demographic trends continue to evolve, retirement adequacy is becoming an increasingly important national concern. While social protection programmes remain critical, tax policy can complement these efforts by encouraging greater personal responsibility and long-term financial planning.

Additional incentives that promote retirement savings, long-term care planning and financial preparedness would help Malaysians build greater resilience throughout different stages of life. More importantly, they would foster a culture of proactive financial planning, reducing reliance on reactive assistance.

Such measures would create financially secure retirees’ benefits for individuals and families while also strengthening the long-term sustainability of public finances and social support systems.

Another area that aligns closely with the government’s emphasis on governance and public service delivery is tax administration reform.

Malaysia has made significant progress in recent years, particularly through the implementation of e-invoicing and the broader digitalisation of tax administration. These initiatives are helping to modernise the tax ecosystem while improving compliance and data quality.

The next phase of reform should focus on simplification, certainty and taxpayer experience. Most taxpayers do not object to paying their fair share of taxes. What they seek is a tax system that offers greater clarity, consistency and certainty.

Continued efforts to simplify stamp duty administration, modernise the First Schedule of the Stamp Act 1949 and remove outdated or unnecessary administrative requirements would reduce compliance costs and minimise interpretational disputes.

A simpler system ultimately benefits everyone. Businesses can devote more resources to growth and investment, while tax authorities can focus efforts on improving compliance and service delivery. Simplification is therefore not merely an administrative exercise; it is a strategic enabler to make it easier for business to operate, strengthen competitiveness, attract investment and improve economic efficiency.

Budget 2027 also presents an opportunity to strengthen tax corporate governance (TCG) practices.

Globally, tax administrations are increasingly promoting approaches based on trust, transparency and cooperative compliance. Good tax governance encourages businesses to establish stronger internal controls, improve oversight and foster greater accountability in managing tax risks.

Malaysia could consider enhancing the adoption of TCG frameworks through targeted incentives or additional deductions related to governance investments and compliance enhancement initiatives.

Importantly, tax governance should extend beyond compliance. Investors, financiers and other stakeholders increasingly view responsible tax behaviour as an important indicator of good corporate governance and sustainable business practices. As environmental, social and governance considerations continue to gain prominence, transparent tax practices are becoming a key measure of corporate responsibility and organisational integrity.

Encouraging stronger tax governance therefore delivers benefits that extend well beyond tax compliance alone.

The government’s focus on digitalisation, artificial intelligence and future-ready jobs is especially important as Malaysia positions itself for the next phase of economic development.

The future competitiveness of the nation will depend significantly on the ability of Malaysians and local businesses to adapt to technological change and seize new opportunities.

For individuals, consideration could be given to expanding tax reliefs for lifelong learning and professional upskilling, particularly in areas such as artificial intelligence (AI), cybersecurity, automation, advanced digital technologies and data analytics.

For businesses, especially small and medium enterprises, enhanced incentives that support workforce transformation, digital adoption and AI-related training could accelerate productivity improvements and narrow capability gaps.

Human capital remains one of the country’s most valuable assets. Investments made today in education, skills and innovation will generate long-term dividends through higher-value employment, stronger productivity and greater economic resilience.

As Budget 2027 takes shape, taxpayers will likely welcome three broad outcomes.

First, meaningful support to address cost-of-living challenges, particularly for middle-income families balancing healthcare, childcare and caregiving responsibilities.

Second, a simpler, more predictable and efficient tax administration framework that enhances certainty while reducing compliance burdens.

Third, stronger incentives that empower Malaysians and businesses to invest in skills, technology and productivity, enabling them to compete successfully in an increasingly dynamic global economy.

The Pre-Budget Statement 2027 provides a strong foundation for continued consultation and constructive engagement.

The challenge now is to translate these aspirations into practical measures that deliver tangible outcomes for both households and businesses. If Budget 2027 successfully balances fiscal responsibility with meaningful support for the rakyat, it will strengthen public confidence, enhance economic resilience and ensure that growth is shared more broadly across society.

Ultimately, a successful budget covers more than revenue collection or expenditure allocation. It should strengthen the household financial security, provide businesses with greater certainty and confidence, and build a more competitive, innovative and resilient economy for future generations.

That should be the true measure of a people-centred Budget 2027.

Soh Lian Seng is head of tax at KPMG in Malaysia

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