Kuala Lumpur:Budget 2027's personal tax relief measures aim to provide financial relief to middle-income earners (M40) and encourage investment growth through targeted incentives for businesses and investors.
According to BERNAMA News Agency, PwC Malaysia's tax partner Michelle Chuo stated that increasing personal tax relief from RM9,000 to RM12,000 marks the first adjustment since 2010 and comes at a time of ongoing cost-of-living pressures. This increase, along with a one-percentage-point reduction in income tax rates for the M40, is expected to give taxpayers in this group more disposable income.
The budget also proposes a reduction in tax rates for chargeable income between RM70,000 and RM150,000. However, high-income earners may face a higher tax rate for chargeable income exceeding RM1 million, which will increase to 30 percent from the current 28 percent. Chuo noted that while the higher personal relief benefits taxpayers broadly, savings for higher-income earners could be partially offset by the increased top marginal tax rate.
On the corporate side, PwC Malaysia's tax partner and private leader Fung Mei Lin highlighted enhancements to the Global Services Hub incentive, which could bolster Malaysia's attractiveness as a regional base for multinational companies. Extensions to the scheme covering treasury and fund activities, along with withholding tax relief on interest and stamp duty exemptions for intercompany loan agreements, are expected to incentivize multinationals to set up regional treasury and financing functions in Malaysia.
Fung also praised the extension of income tax exemptions for individual investors through equity crowdfunding platforms and angel investors financing early-stage technology startups until the end of 2030. Additionally, an RM270 million allocation through ECF and peer-to-peer financing platforms is set to support the startup financing ecosystem.
Regarding green investments, Fung mentioned that ongoing support for the low-carbon transition, coupled with a clearly defined scope of qualifying expenditure, could help direct incentives toward investments with a significant impact. She also noted that the one-percentage-point reduction in the income tax rate for micro, small, and medium enterprises and an increased capital allowance threshold would alleviate cash-flow pressures for these businesses.
Fung called for clear and practical guidance as budget measures are legislated, especially concerning how incentives interact with global minimum tax rules. She also stressed the need for careful consideration of the Reinvestment Allowance review, which has long supported manufacturers and other businesses in Malaysia.
Fung welcomed the introduction of a Multi-Family Office model in Forest City, saying it could expand Malaysia's wealth management industry and create demand for local professionals. She emphasized the importance of clear guidance on licensing, tax treatment, and substance requirements to attract participants.
Overall, Fung remarked that Budget 2027 demonstrated a balance between fiscal discipline and growth support, while underscoring the need for timely legislation and clear implementation guidance to achieve the intended policy incentives.