KUALA LUMPUR (Oct 9): Micro, small and medium enterprises will get a one-percentage-point reduction in income tax rates next year to cope with rising costs of doing business.
Under the proposal, the tax rate on the first RM150,000 of chargeable income will be reduced to 14%, while the rate on chargeable income exceeding RM150,000 up to RM600,000 will be lowered to 16%, Prime Minister Datuk Seri Anwar Ibrahim announced in his Budget 2027 speech on Friday.
The measure is expected to benefit 300,000 enterprises, providing additional income of up to RM6,000.
Officially referred to as MSMEs in Malaysia, they are defined as manufacturers with sales turnover not exceeding RM50 million or no more than 200 full-time employees. For services and other sectors, the turnover must be not exceeding RM20 million or no more than 75 employees.
MSMEs make up more than nine out of 10 business establishments in the country and provide jobs for over half of the national workforce.
Anwar also announced that opening of savings and current accounts is granted full stamp duty exemption effective from Jan 1, 2027.
The government has also proposed several tax measures to support businesses and manufacturers, including allowing manufacturers to reclaim sales tax on locally purchased machinery, spare parts and equipment.
Under the proposals, manufacturers are allowed to reclaim sales tax on machinery, spare parts, and equipment purchased from local traders or distributors. This facility also extends to raw materials used in the production of pharmaceutical products, animal feed, fertilisers, and pesticides.
To enhance the productivity of local companies, the accelerated capital allowance has been extended until 31 December 31, 2030 for expenditure on local plant and machinery, as well as IT hardware and software.
Malaysia will also raise the qualifying value threshold for each small asset eligible for capital allowance to RM3,000. For companies other than MSMEs, the overall claim limit will be increased to RM30,000.
To boost cash flow of mid-sized companies, the government has proposed a stamp duty of just RM10 for agreements utilising excess credit provided by banks beginning Jan 1, 2027 until the end of 2030.