Budget 2027 for Malaysian SMEs: Every Change and Its Date

Budget 2027 was tabled in the Dewan Rakyat on 9 October 2026. For small and medium businesses, the measures fall into five groups: tax, wages, financing, government procurement and a few smaller costs. Most start on 1 January 2027 or from the year of assessment (YA) 2027; the minimum wage change starts in June 2027. Budget measures are proposals until they are legislated or the agency concerned publishes the rules, so treat the dates below as announced, and check the official source before acting on one.

The changes at a glance

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Measure	What was announced	When
SME income tax rate	First RM150,000 of chargeable income: 15% to 14%. RM150,001 to RM600,000: 17% to 16%. Above RM600,000 stays at 24%	From YA 2027
Small value assets	Per-item limit for full capital allowance: RM2,000 to RM3,000	From YA 2027
Minimum wage	RM1,700 to RM2,000 a month, with an exemption for MSMEs with annual sales below RM50 million	June 2027
Stamp duty	RM10 on P2P financing agreements between MSMEs and investors; full exemption when opening savings and current accounts	From 1 January 2027
Sales tax refund	Local traders and distributors can claim back sales tax on qualifying machinery, spare parts, equipment and inputs they supply to manufacturers	From 1 January 2027
Financing	RM57 billion in financing and guarantees for 2027, plus an extra RM5 billion for Bank Negara's SME Stabilisation Relief Facility	2027; relief facility until 30 June 2027 or until fully used
Government maintenance works	Direct appointment up to RM200,000 and quotation up to RM3 million for maintenance, repair and improvement works on government facilities	Announced; watch for Treasury circulars

1. Tax: a lower rate and a bigger small-asset limit

The SME rate drops by one percentage point in each of the two lower bands. It applies to companies and LLPs that qualify as MSMEs, which the Budget tax measures describe as paid-up ordinary share capital (or LLP capital contribution) of RM2.5 million or less and annual sales of no more than RM50 million. LHDN's public ruling on MSME tax treatment sets further conditions, including on ownership, so confirm your status with your tax agent.

What the cut is worth, using the announced bands:

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Chargeable income	Tax saved compared with YA 2026 rates
RM100,000	RM1,000 (1% of RM100,000)
RM150,000	RM1,500 (1% of RM150,000)
RM300,000	RM3,000 (RM1,500 on the first band + RM1,500 on the next RM150,000)
RM600,000 or more	RM6,000 (RM1,500 + RM4,500)

Small value assets are items you can claim full capital allowance on in the year you buy them. The per-item limit rises from RM2,000 to RM3,000 from YA 2027. MSMEs already have no overall annual cap on these claims; for other companies the cap rises from RM20,000 to RM30,000. In practice, a RM2,500 laptop or tool that you would previously have claimed over several years could be claimed in full in YA 2027, subject to the final rules.

The Budget also extends accelerated capital allowance for locally made machinery and qualifying ICT equipment and software to 31 December 2030.

2. Wages: RM2,000 from June 2027, with an MSME exemption

The national minimum wage is proposed to rise from RM1,700 to RM2,000 a month from June 2027. MSMEs with annual sales below RM50 million are exempt from the new rate, to give them room to adjust. The Budget also introduces a minimum wage for semi-skilled occupations and graduates, starting at RM2,500 a month.

Two things to do now:

Get your SME status certificate. On 20 October 2026 the Deputy Minister of Entrepreneur and Cooperatives Development urged MSMEs that want the exemption to obtain an SME status certificate from SME Corp. Malaysia. The fee was reported as RM100, with a 50% discount until 31 December.
Keep paying at least RM1,700. The current minimum wage applies to every employer until the new order takes effect. Our salary structures guide explains today's rules.

The full mechanics of the exemption (how it is claimed, for how long, and whether it covers the RM2,500 floor) had not been published when this guide was written. We will update this section when they are.

3. Financing: more money, but you still have to qualify

The government says total financing and guarantees for businesses will rise from RM50 billion in 2026 to RM57 billion in 2027. The parts most relevant to small firms:

RM6.6 billion in microfinance: RM3 billion through AIM, RM1.3 billion through TEKUN and RM1.7 billion through BSN.
RM32 billion in guarantees through SJPP and CGC, which help businesses without much collateral get bank financing.
An extra RM5 billion for Bank Negara's SME Stabilisation Relief Facility, for SMEs affected by the economic impact of the Middle East conflict. It stays open until 30 June 2027 or until it is fully used. Details are at bnm.gov.my/funds4sme.
RM10 stamp duty on P2P financing agreements between MSMEs and investors from 1 January 2027, and on CAKNA financing for government contracts until 31 December 2030.

An allocation is not an approval. Banks and agencies still assess each application, so keep your latest management accounts, bank statements and SSM documents ready.

4. Government procurement: bigger jobs without a full tender

For maintenance, repair and improvement works on government facilities, the Budget raises the limits to RM200,000 by direct appointment and RM3 million by quotation, so ministries can move faster. Procurement for Bumiputera G1 to G4 contractors rises from RM4 billion to RM7.5 billion. If you have never bid for government work, start with our guide to bidding for government tenders.

5. Smaller items worth knowing

Opening a business bank account will be fully exempt from stamp duty from 1 January 2027.
Traders who sell machinery or inputs to manufacturers can claim a sales tax refund on qualifying items from 1 January 2027.
MediAsas, a basic medical insurance or takaful plan, launches in January 2027, with RM40 million in vouchers for employees of SMEs with fewer than 75 staff.
RM30 million is set aside to help 4,000 MSMEs adopt AI and automation. Programme details had not been published.

Your Budget 2027 checklist

Ask your tax agent whether your company meets the MSME tests for YA 2027.
If you plan small equipment purchases, note the RM3,000 per-item limit from YA 2027.
Apply for an SME Corp status certificate if you may rely on the minimum wage exemption.
If you hire graduates or semi-skilled staff, budget for the RM2,500 floor until the details are confirmed.
If cash flow is tight, check the BNM funds page before the relief facility closes on 30 June 2027.

Frequently asked questions

Does the lower tax rate apply to sole proprietors?
No. The MSME rate in the Budget applies to companies and LLPs. A sole proprietor reports business income as an individual and is taxed at individual income tax rates.

Do I need to do anything now to get the lower rate?
Not for YA 2027 itself; it applies through your normal tax filing if you qualify. What you can do now is check that your paid-up capital, sales and shareholding keep you within the MSME definition.

Is the minimum wage exemption automatic?
That has not been confirmed. The government has advised MSMEs to obtain an SME status certificate from SME Corp, which suggests you will need to show your status.

Sources: Ministry of Finance, Budget 2027 tax measures (Appendices 11, 12 and 33 and the stamp duty appendices) and Summary of Budget 2027 Measures; Bank Negara Malaysia on Budget 2027, 9 October 2026; KUSKOP media statement, 10 October 2026; RTM report on the SME status certificate, 20 October 2026; LHDN, tax responsibilities for individuals with business income (sole proprietors are taxed at individual rates). Budget measures are proposals until legislated or implemented. This guide is general information, not tax or legal advice; confirm your position with LHDN or a licensed tax agent.

Budget 2027 for SMEs: What Changes and When