Kuala Lumpur:Budget 2027's initiatives are set to provide significant annual tax savings for about five million taxpayers, potentially up to RM1,600 each, according to CIMB Securities Sdn Bhd.
According to BERNAMA News Agency, the budget introduces more generous personal income tax relief than previously anticipated. The basic individual tax relief has been increased from RM9,000 to RM12,000, and tax rates have been reduced by one percentage point for those with chargeable incomes between RM70,001 and RM150,000.
In addition to personal tax relief, the budget also includes measures that benefit businesses. Lower corporate tax rates for micro, small, and medium enterprises (MSMEs) and expanded sales tax recovery on qualifying machinery and production inputs are among the measures introduced. Manufacturers are now able to reclaim sales tax on machinery, spare parts, and equipment sourced from local traders or distributors, as well as on raw materials used in producing pharmaceutical products, animal feed, fertilizers, and pesticides.
Budget 2027 is designed to bolster household incomes and investment while maintaining fiscal discipline. The government's fiscal deficit target for 2027 is set at 3.3% of GDP, which is slightly better than the forecasted 3.4%, despite an upward revision of the 2026 deficit to 3.6%.
The budget is expected to have a positive impact on the consumer sector in the long term, offering targeted cash assistance and tax reliefs to ease living costs and boost disposable income. This is likely to benefit retailers focusing on essentials and affordable products, as well as consumer staples producers like Nestlé Malaysia and QL Resources.
A notable aspect of the budget is the 17.6% increase in the minimum monthly wage to RM2,000, effective from June 2027. While this benefits over four million workers, MSMEs with annual sales below RM50 million are exempted. The wage increase could elevate costs for labour-intensive sectors, but it is expected to support household purchasing power in the long run.
Investment opportunities are also highlighted in the budget, with an RM83 billion development expenditure allocation that supports infrastructure projects and housing incentives. This is expected to benefit construction and property companies. The budget also extends green investment incentives and semiconductor funding, benefiting renewable energy and technology sectors.
Overall, Budget 2027 is viewed as neutral to mildly positive for Malaysian equities, with a limited direct impact on aggregate FTSE Bursa Malaysia KLCI earnings anticipated in 2027.