Budget 2027, tabled on 9 October 2026, proposes lower SME tax, a higher minimum wage and more personal tax relief. Below is what each would mean if you own a Sdn Bhd or employ staff, and what to check now. Every measure here is still a proposal: the tax changes apply only once they are passed into law, and the minimum wage rise only once a new Minimum Wages Order is made.
In short
- 14%: proposed SME tax on your first RM150,000, from YA 2027 (down from 15%).
- RM2,000: proposed minimum wage a month, from June 2027 (up from RM1,700). MSMEs with annual sales below RM50 million would be exempted.
- RM12,000: proposed individual tax relief, from YA 2027 (up from RM9,000).
- RM3,000: proposed limit per low-value asset, from YA 2027 (up from RM2,000).
- Status: proposals only. Nothing in your tax or payroll changes yet.
What we don’t know yet
- When the law passes. The tax changes apply only once they are passed into law, and the minimum wage rise only once a new Minimum Wages Order is made.
- The exact start day for RM2,000. The speech says June 2027, with no day given.
- How the RM50 million sales test is counted for the minimum wage exemption.
- How employers take up MediAsas.
How would company tax change for SMEs?
If your company qualifies for SME rates, you would pay one percentage point less on your first RM600,000 of chargeable income from YA 2027. The top rate stays at 24%.
| Chargeable income | YA 2026 | YA 2027 (proposed) |
|---|---|---|
| First RM150,000 | 15% | 14% |
| RM150,001 to RM600,000 | 17% | 16% |
| Above RM600,000 | 24% | 24% |
What would you save? The Government puts it at up to RM6,000 a year, and expects about 300,000 micro, small and medium enterprises (MSMEs) to benefit. By our reading, that’s one point off both bands: RM1,500 on the first RM150,000 and RM4,500 on the next RM450,000. So you’d save the full RM6,000 only if your chargeable income is RM600,000 or more.
Don’t confuse these with the current YA 2026 rates: 15% on the first RM150,000, then 17% on RM150,001 to RM600,000.
Does your Sdn Bhd still qualify for SME rates?
The lower rates apply only if your company meets all of these tests:
- incorporated and resident in Malaysia
- paid-up capital of RM2.5 million or less
- gross business income of RM50 million or less
- no more than 20% owned, directly or indirectly, by companies incorporated outside Malaysia or by non-Malaysian citizens
- not linked (more than 50%) to a company with paid-up capital above RM2.5 million
If your company fails any one of them, it pays 24% on all its chargeable income.
What would change for employers and payroll?
Minimum wage. The Government has agreed to raise the minimum wage from RM1,700 to RM2,000 a month from June 2027. MSMEs with annual sales below RM50 million would be exempted. Until a new Minimum Wages Order is made, RM1,700 is the rate in force, so keep paying at least that.
A RM2,500 minimum planned for semi-skilled workers and graduates. The speech describes this as the start of a reform of the workers’ income framework, with no date given. There is nothing to act on yet.
Wages paid through a bank, from YA 2028. If your company is not an MSME, it could deduct wages for tax only if you pay them through a financial institution or another cashless method. If you’re an MSME, this doesn’t apply to you. It would start from YA 2028, a year after the other tax measures.
MediAsas, a new medical plan from January 2027. For SMEs with fewer than 75 staff, the Government would take RM200 per employee off the first-year premium, for up to 50 employees.
What other business measures are proposed?
- Low-value assets: RM3,000 per asset (up from RM2,000), from YA 2027. The yearly cap for non-MSMEs rises to RM30,000 (up from RM20,000). MSMEs would still have no yearly cap.
- Accelerated capital allowance: today’s scheme for locally made plant and machinery, ICT and software ends on 31 December 2026. The proposal extends it to spending up to 31 December 2030.
- Stamp duty on P2P financing: if your MSME raises funds through peer-to-peer financing, those agreements are fully exempt until 31 December 2026. From 2027 to 2030, the duty would be capped at RM10 instead. Mid-tier companies that pass bank credit on to their MSME suppliers would also pay only RM10 on that agreement.
- Bank accounts: no stamp duty on opening savings and current accounts from 1 January 2027 (down from RM10).
What would change for you as an owner?
These are personal income tax proposals, all from YA 2027.
- Individual relief: RM12,000 (up from RM9,000). This is the first rise since YA 2010.
- RM70,001 to RM100,000: 18% (down from 19%).
- RM100,001 to RM150,000: a new band at 24% (down from 25%). RM150,001 to RM400,000 stays at 25%.
- Above RM1 million: 30%. This one is a rise: the 28% band would end at RM1 million, so income between RM1 million and RM2 million would be taxed at 30% instead of 28%.
Wider reliefs include:
- postpartum care, up to RM3,000 within the RM10,000 medical cap
- all care costs for your parents, not only medical costs
- sports shoes, up to RM300 within the RM1,000 cap
- your own study in any field, at a recognised level
- children’s STEM, arts, language and religious classes, up to RM2,000
- AI subscriptions, and pet adoption and vaccination, within the RM2,500 lifestyle cap
First home: stamp duty relief is widened and extended. Today, the first RM500,000 is exempt until 31 December 2027. Under the proposal, for homes up to RM750,000, the first RM500,000 stays exempt and you pay half the duty on the rest. This covers sale and purchase agreements signed from 2027 to 2030.
What should you check now?
- Staff pay: list everyone paid at or near RM1,700, and check your annual sales against RM50 million.
- Salary payments: if you are not an MSME, check that every salary goes by bank or another cashless method before your YA 2028 basis period.
- Your books: check that your bookkeeping is up to date, so asset purchases are recorded for capital allowances and your tax figures are based on real numbers.
- Tax estimate: before your YA 2027 CP204 estimate is due, ask your tax agent whether to base it on today’s rates or the proposed 14% and 16%.
- Timing: check where each proposal stands before you change anything. The tax changes need to be passed into law, and the wage rise needs a new Minimum Wages Order.
Not sure how Budget 2027 affects your books, tax and payroll? We can help to simplify and guide you through this step by step. SimpliFY, our financial-year compliance package, brings your bookkeeping, your company tax return (Form C), your employer return (Form E) and your annual filings into one plan, with payroll processing on the Essential plan.
See the SimpliFY compliance package
This page is general information, not advice. Confirm the current requirement with LHDN or a licensed tax adviser before you act.
Frequently asked questions
Is Budget 2027 law yet?
No. Budget 2027 was tabled on 9 October 2026, and every measure is a proposal. The tax changes need to be passed into law. The minimum wage rise needs a new Minimum Wages Order.
When do the new SME tax rates start?
From YA 2027, once the law is passed. As proposed, the first RM150,000 is taxed at 14% and RM150,001 to RM600,000 at 16%. Above RM600,000 stays at 24%.
Does the RM2,000 minimum wage apply to my SME?
As proposed, MSMEs with annual sales below RM50 million would be exempted. How sales are counted has not been published yet. Until a new Minimum Wages Order is made, RM1,700 is the rate in force.
Sources
- Budget 2027 speech, English translation (the Bahasa Malaysia version prevails): belanjawan.mof.gov.my
- Ucapan Belanjawan 2027 (Bahasa Malaysia): belanjawan.mof.gov.my
- Langkah Cukai Belanjawan 2027 (tax measures), Ministry of Finance, 9 October 2026: belanjawan.mof.gov.my
- SME tests: LHDN Public Ruling No. 8/2025 and the Company Return Form Guidebook 2026
Checked against the Budget papers on 19 October 2026.
