Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim tabled Budget 2027 in the Dewan Rakyat on Friday, 9 October 2026. Themed “Menggapai di Langit, Mengakar di Bumi”, it is the fifth MADANI Budget and the second under the Thirteenth Malaysia Plan (RMK13).

In short: Budget 2027 allocates RM459.84 billion. For small and medium enterprises (SMEs) and micro, small and medium enterprises (MSMEs), the main measures are a one-percentage-point cut in MSME income tax to 14% on the first RM150,000 of chargeable income, RM57 billion in financing and guarantees, RM6.6 billion in microfinancing, and a minimum wage of RM2,000 from June 2027. MSMEs with annual sales below RM50 million are exempt from the new minimum wage.

MSMEs contributed 39.7% of Malaysia’s gross domestic product (GDP) in 2025, and RMK13 aims to raise that share to 50% by 2030. This guide covers the Budget 2027 measures that reach small businesses most directly: tax, financing, cash flow and the cost of hiring.

Dalam Bahasa Malaysia: Belanjawan 2027 Malaysia: Intipati Bajet 2027 untuk PKS dan PMKS

Contents:

Budget 2027 Highlights for SMEs

  • MSME income tax cut by one percentage point: 14% on the first RM150,000 and 16% on RM150,001 to RM600,000. About 300,000 MSMEs stand to save up to RM6,000 each.
  • Financing and guarantees raised to RM57 billion, from RM50 billion in 2026, including up to RM32 billion in guarantees from Syarikat Jaminan Pembiayaan Perniagaan (SJPP) and Credit Guarantee Corporation (CGC).
  • Bank Negara Malaysia (BNM) adds RM5 billion to its financing fund for SMEs hit by the West Asia conflict, bringing it to RM10 billion.
  • RM270 million to draw private capital through peer-to-peer (P2P) financing and equity crowdfunding (ECF) platforms, with stamp duty on P2P financing agreements capped at RM10 from 2027 to 2030.
  • Microfinancing raised to RM6.6 billion through Amanah Ikhtiar Malaysia (AIM), TEKUN Nasional and Bank Simpanan Nasional (BSN).
  • RM200 million Sejahtera MADANI Grant for equipment and training for 40,000 recipients, mainly women.
  • Minimum wage rises to RM2,000 from June 2027, with MSMEs below RM50 million in sales exempt.
  • RM1 billion in export financing from Bank Pembangunan Malaysia Berhad (BPMB), and RM60 million for the Malaysia External Trade Development Corporation (MATRADE).
  • An E-Commerce Bill will be tabled at the next Parliament sitting.

MSME Income Tax Cut by One Percentage Point

The tax cut is the measure most SME owners will feel first, because it lowers the bill on profit they are already making. The Budget speech framed it as a response to business owners carrying higher operating costs.

Chargeable income Current rate Proposed rate (from YA 2027)
First RM150,000 15% 14%
RM150,001 to RM600,000 17% 16%

These rates apply to MSMEs: companies with paid-up capital of RM2.5 million or less (or limited liability partnerships with capital contributions of RM2.5 million or less) and annual sales of up to RM50 million. Chargeable income above RM600,000 stays at 24%.

What the cut is worth depends on profit:

  • Chargeable income of RM150,000: RM1,500 less tax
  • Chargeable income of RM300,000: RM3,000 less tax
  • Chargeable income of RM600,000: RM6,000 less tax (from RM99,000 to RM93,000)

Other business tax proposals:

  • Small-value assets. The capital allowance limit for each small-value asset rises to RM3,000. For companies other than MSMEs, the overall claim limit rises to RM30,000.
  • Accelerated Capital Allowance on local plant and machinery, and on ICT equipment and software, is extended to 31 December 2030.
  • Sales tax refunds. From 1 January 2027, local traders and distributors can claim a refund of sales tax paid on machinery, spare parts and equipment they supply to manufacturers, and on inputs for pharmaceuticals, animal feed, fertiliser and pesticides. Until now, manufacturers’ sales tax exemption only covered goods imported directly or bought from local manufacturers.
  • RM10 stamp duty on supplier financing. To help MSME suppliers get paid earlier, agreements between mid-tier companies and banks for excess credit facilities extended to MSME suppliers carry stamp duty of no more than RM10, for agreements executed from 1 January 2027 to 31 December 2030.
  • Bank accounts. Opening a savings or current account is fully exempt from stamp duty from 1 January 2027.

Budget 2027 did not announce changes to e-invoicing, and the rollout continues. According to the Economic Outlook 2027, more than 265,000 taxpayers had submitted e-invoices by the end of August 2026, with over 1.8 billion issued since the system launched.

The MSME rate cut and the capital allowance change apply from the year of assessment (YA) 2027, and the stamp duty and sales tax measures from 1 January 2027. All tax measures remain proposals until the Finance Bill is passed. Full details are in the Budget 2027 tax measures document.

Personal Income Tax Changes for Business Owners

Sole proprietors and partners pay tax on business profit at personal rates, so the individual tax changes matter to them as much as the MSME rate does to companies. All the changes below apply from YA 2027.

  • Individual (self) tax relief raised from RM9,000 to RM12,000, the first revision since 2010.
  • Resident individual rates cut by one percentage point: the RM70,000 to RM100,000 band falls to 18%, and the RM100,000 to RM150,000 band falls to 24%.
  • Chargeable income above RM1 million is taxed at 30%, down from the previous threshold of RM2 million.
  • Several reliefs are widened, including medical treatment (now covering postnatal care), care of parents and grandparents, sports equipment (including sports shoes), education fees (including children’s tuition) and lifestyle (including AI subscriptions).

The Budget speech estimates these changes give about 5 million taxpayers up to RM1,600 more in disposable income.

RM57 Billion in Financing and Guarantees

Total financing and guarantee facilities for 2027 rise from RM50 billion to RM57 billion, spread across several institutions:

Scheme Allocation Who it is for
SJPP and CGC guarantees Up to RM32 billion SMEs and mid-tier companies; SJPP guarantee limit raised to RM50 million
SJPP guarantees for mergers and acquisitions (M&A) RM1 billion Local companies expanding through M&A
BNM financing fund Additional RM5 billion (RM10 billion in total) SMEs affected by the West Asia conflict
BPMB Group RM7 billion Seven strategic sectors, including renewable energy, logistics, aerospace and semiconductors
BPMB export financing RM1 billion Local MSMEs entering export markets

SJPP guarantees are now open to mid-tier companies in all sectors, not only SMEs.

BNM doubled its fund because of demand. The RM5 billion SME Stabilisation Relief Facility launched in 2026 to provide working capital to viable SMEs affected by the West Asia conflict, and RM2.8 billion had been approved for more than 4,900 SME accounts by August 2026. SJPP also offered an additional RM5 billion in guarantees for affected MSMEs, covering up to 80% of the financing amount for up to 10 years.

Demand for SME financing is high across the banking system too. BNM data in the Economic Outlook 2027 shows SME loan applications of RM203.0 billion up to the end of July 2026, against approvals of RM107.8 billion. By value, about half of what SMEs applied for was approved.

Most of these government schemes run through banks and development financial institutions, each with its own eligibility criteria and approval timeline. For businesses that need working capital sooner, Funding Societies’ SME financing is an alternative to an SME loan that can sit alongside government schemes.

RM270 Million for P2P and ECF Platforms

Budget 2027 sets aside RM270 million to draw private capital through P2P financing and ECF platforms, to support SMEs, mid-tier companies and social enterprises.

Two related tax measures:

  • Stamp duty capped at RM10 on P2P financing agreements between MSMEs and investors, from 1 January 2027 to 31 December 2030. These agreements were fully exempt until 31 December 2026, so the cap replaces the full exemption.
  • Income tax exemptions for individual investors on ECF platforms, and for catalyst investors in early-stage tech startups, extended to 31 December 2030.

The speech did not say which agency will run the RM270 million or how it will be disbursed. The Economic Outlook 2027 shows the government already channelled funds through P2P and ECF platforms in 2026:

  • Smart Manufacturing Scheme under the New Industrial Master Plan 2030 Strategic Co-Investment Fund (CoSIF NIMP), launched in July 2026 by the Ministry of Investment, Trade and Industry (MITI) and the Securities Commission Malaysia. For every RM1 of private investment raised through ECF and P2P platforms, the government contributes RM2 for SMEs and mid-tier companies investing in robotics, artificial intelligence (AI) and digital solutions, until 2030. For other sectors, the co-investment ratio is temporarily raised from 1:2 to 1:1 until the end of 2027.
  • Malaysia Co-Investment Fund (MyCIF), overseen by the Securities Commission, launched two initiatives worth RM50 million in March 2026 to widen access to financing for MSMEs.

Together, these put P2P financing firmly inside government policy as a channel for SME funding. P2P platforms in Malaysia are regulated by the Securities Commission Malaysia. Funding Societies is one of Malaysia’s P2P financing platforms, and Modalku Ventures Sdn Bhd is registered with the Securities Commission Malaysia.

RM6.6 Billion Microfinancing and Grants for Small Businesses

Microfinancing rises to RM6.6 billion in 2027:

Agency 2027 allocation Target group
Amanah Ikhtiar Malaysia (AIM) RM3 billion 360,000 entrepreneurs
TEKUN Nasional RM1.3 billion Bumiputera entrepreneurs
Bank Simpanan Nasional (BSN) RM1.7 billion Youth, gig workers, hawkers and vulnerable groups
TEKUN and AIM RM150 million Indian entrepreneurs

Grants and support programmes:

  • RM200 million Sejahtera MADANI Grant for equipment and training for 40,000 recipients, mainly women.
  • Matching grant of up to RM5,000 for MSMEs getting halal certification for the first time, and RM25,000 grants for halal MSMEs in areas such as cosmetics and pharmaceuticals.
  • RM270 million from BSN and Agrobank to finance gig workers who want to start a business or buy their first home.
  • Perbadanan Usahawan Nasional Berhad (PUNB) financing fund raised to RM500 million, from RM350 million.
  • RM30 million Malaysia Digital Economy Corporation (MDEC) fund to help 4,000 MSMEs adopt AI and automate operations.
  • RM142 million for the National Information Dissemination Centres (NADI) to help young entrepreneurs sell online.
  • RM10 million for Jom Malaysia to bring rural products and high-value services onto digital platforms and overseas markets.

Most government microfinancing is reserved for specific groups. For business owners outside those groups who are considering a micro loan, Funding Societies’ Micro Financing/-i provides working capital financing for small businesses, including a Shariah-compliant option.

Funding Societies Micro Financing/-i

RM2,000 Minimum Wage: What It Means for SME Employers

The minimum wage rises from RM1,700 to RM2,000 a month from June 2027, covering more than 4 million workers. MSMEs with sales below RM50 million are exempt, to give them room to adjust their business models. The length of the exemption has not been announced.

Other wage measures:

  • An RM2,500 monthly minimum wage for semi-skilled jobs and graduates.
  • The living wage benchmark at government-linked investment companies (GLICs) and government-linked companies (GLCs) rises from RM3,100 to RM3,400 a month, covering 230,000 workers.
  • Tax deductions on salaries. From YA 2028, companies other than MSMEs can only claim tax deductions on salaries paid through financial institutions or cashless payment methods.

Even with the exemption, SMEs close to the RM50 million threshold, or competing with larger firms for staff, are likely to feel the new rate through market salary expectations.

Exports, E-Commerce and Local Investment

These measures matter most for SMEs expanding overseas or into larger companies’ supply chains:

  • RM60 million for MATRADE to help local companies enter and diversify overseas markets, alongside BPMB’s RM1 billion in export financing.
  • The E-Commerce Bill will be tabled at the next Parliament sitting to make online platforms and sellers more accountable, and to protect local MSMEs from unfair competition by foreign e-commerce companies.
  • RM25 billion in domestic investment by GLICs under the Government-Linked Enterprises Activation and Reform Programme (GEAR-uP).
  • RM2.1 billion through Dana NIMP, the Retirement Fund (Incorporated) (KWAP) Dana Pemacu and Khazanah’s mid-tier company (MTC) fund for mid-tier companies in electrical and electronics (E&E), digital, aerospace and medical devices.
  • RM250 million Dana Ciptawan from Khazanah and the Bumiputera Agenda Steering Unit (TERAJU) for Bumiputera mid-tier companies, with TERAJU providing up to RM1 billion in financing.
  • Government procurement for Bumiputera G1 to G4 contractors rises to RM7.5 billion, from RM4 billion this year.
  • RM450 million for startups through Khazanah’s Jelawang Capital and KWAP’s Dana Perintis, plus RM41 million for Cradle Fund.

Trade is growing. In the first eight months of 2026, Malaysia’s total trade reached RM2.5 trillion, and exports rose 31.2% to RM1.36 trillion.

Budget 2026 vs Budget 2027: What Changed

Item 2026 2027
Federal expenditure RM441.1 billion (revised) RM459.84 billion
Business financing and guarantees RM50 billion RM57 billion
BNM SME financing fund (West Asia conflict) RM5 billion RM10 billion
MSME tax (first RM150,000) 15% 14% (proposed)
Minimum wage RM1,700 RM2,000 (from June 2027)
Fiscal deficit 3.6% (projected) 3.3% (projected)

For last year’s measures, see our summary of Budget 2026 for SMEs.

Malaysia’s Economic Outlook for 2027

  • Total budget: RM459.84 billion, made up of RM376.8 billion in operating expenditure and RM83 billion in development expenditure. Including GLIC, public-private and statutory body investment, the total reaches RM510 billion.
  • Federal revenue: projected at RM380.8 billion in 2027.
  • Fiscal deficit: projected to fall to 3.3% of GDP in 2027, from 3.6% in 2026, with a target of 3% by 2028.
  • Federal government debt: expected at 63.7% of GDP in 2027.
  • GDP growth: forecast at 4.2% to 5.2% in 2027. The economy grew 5.7% in the first half of 2026, and full-year 2026 growth is expected near the top of the 4.8% to 5.3% range.
  • MSME contribution: 39.7% of GDP in 2025, with a 50% target by 2030.
  • Inflation: 1.9% (June 2026).
  • Unemployment: 2.9% in the first quarter of 2026, the lowest in 11 years.

Related Reading

The Bottom Line

Budget 2027 gives MSMEs tax relief and wider access to financing, but most of the money flows through agencies and banks with their own application processes, so the benefit will not arrive overnight. SME owners with financial statements and tax records in order will be better placed when these schemes open for applications. For working capital needs that cannot wait, Funding Societies’ SME financing and Micro Financing/-i are additional options.

FAST CASH
Financing up to RM200,000 from 0.8% per month, with the money in less than 5 working days. No collateral.
UNLOCK CASH FLOW
A credit line of up to RM1 million, advancing up to 80% of the value of unpaid invoices.
QUICK CAPITAL INJECTION
Financing up to RM500,000 at 1.0% to 1.5% per month, up to 18 months, with no collateral required.
LARGER LIMITS
Financing up to RM20 million, at up to 60% of the property’s value, for properties in Peninsular Malaysia.

Budget 2027 FAQ

Is the 2027 budget out?

Yes. Budget 2027 was tabled in the Dewan Rakyat on Friday, 9 October 2026, by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim. The Pre-Budget Statement 2027 was published earlier, on 18 August 2026.

What is in Budget 2027?

For SMEs, the main measures are a one-percentage-point MSME tax cut (14% on the first RM150,000), RM57 billion in financing and guarantees, RM6.6 billion in microfinancing, RM270 million to draw private capital into P2P and ECF platforms, and an RM2,000 minimum wage from June 2027, with MSMEs under RM50 million in sales exempt. For individuals, resident tax rates fall by one percentage point in the RM70,000 to RM150,000 bands, and individual relief rises to RM12,000.

How much is the government budgeting to spend in 2027, and what is the increase?

Federal expenditure for 2027 is estimated at RM459.84 billion, 3.6% higher than the revised 2026 allocation of RM441.1 billion and about 19.8% of GDP. Including investment by GLICs, public-private partnerships and statutory bodies, the total is RM510 billion.

Is income tax reduced in Budget 2027?

Yes. The MSME income tax rate falls by one percentage point to 14% on the first RM150,000 and 16% on RM150,001 to RM600,000. For individuals, resident tax rates fall by one percentage point in the RM70,000 to RM150,000 bands, and individual (self) relief rises from RM9,000 to RM12,000. Both apply from YA 2027, subject to the Finance Bill being passed.

What is the difference between operating and development expenditure?

Operating expenditure covers the government’s day-to-day running costs, such as civil servant salaries and pensions, subsidies and debt service. Development expenditure funds long-term projects such as roads, schools, hospitals and digital infrastructure. In Budget 2027, operating expenditure is RM376.8 billion and development expenditure is RM83 billion.

Has Budget 2027 been passed?

Not yet. Budget 2027 was tabled as the Supply Bill 2027, which must be debated and approved by the Dewan Rakyat and the Dewan Negara. The tax measures are legislated separately through the Finance Bill.

When does Malaysia’s fiscal year 2027 start?

Malaysia’s federal financial year follows the calendar year, so fiscal year 2027 runs from 1 January to 31 December 2027.

This article is for general information only and does not constitute financial advice.

Sources