Malaysia sees tax collection rising in 2026: deputy minister

Malaysia sees tax collection rising in 2026: deputy minister

Malaysia Projects Strong Tax Revenue Growth in 2026, Citing Wage Stability and Digital Compliance

Malaysia’s tax revenue is expected to rise significantly in 2026, driven by stable wage growth, stronger corporate earnings, and improved tax compliance, Deputy Finance Minister Liew Chin Tong announced during a parliamentary session on March 2, 2026. The government forecasts a 9.4% year-on-year increase in individual income tax collections to RM49.07 billion, alongside a 6.5% rise in corporate tax revenue to RM103.35 billion according to projections. Sales tax is projected at RM26.6 billion, and service tax at RM33 billion, compared to RM25.6 billion and RM30.3 billion, respectively, in 2025 as reported.

The growth in individual tax collections is attributed to a 13% rise in registered taxpayers, supported by low unemployment and salary adjustments for civil servants under the Public Service Remuneration System (SSPA) according to government data. Corporate tax gains are linked to stronger earnings in services and manufacturing sectors, as well as the phased rollout of e-invoicing since August 2024, which aims to reduce tax leakages and enhance compliance as stated.

For 2025, tax collections stood at RM44.86 billion for individual income tax and RM97.03 billion for corporate tax according to figures. Finalized 2025 figures will be published in the Federal Government Financial Statement 2025, slated for release in Q4 2026 as announced.

Revenue from direct and indirect taxes is channeled into the Federal Consolidated Fund, with entertainment duty being an exception assigned to state governments according to market analysis. The projections underscore the government’s focus on fiscal sustainability and expanding Malaysia’s tax base amid evolving economic conditions as noted.

These measures reflect a strategic shift toward digital tax administration and broader compliance, positioning Malaysia to strengthen public finances while addressing challenges in a dynamic global economy.