Budget 2027, tabled on 9 October 2026, puts AI near the centre of its plans, alongside RM6 billion for research, development and commercialisation across ministries. Most of that goes to agencies, universities and large programmes. Three measures reach a small business directly: an RM30 million MDEC fund for 4,000 MSMEs, tax relief on personal AI subscriptions, and the accelerated allowance on software, which Budget 2027 proposed extending to 2030. All three are proposals until the Finance Bill passes or the agency publishes its rules.

This guide lists what you can claim, what is still only an announcement, and the part of the AI story that affects every business whether it adopts AI or not: your customers are already asking AI tools who to buy from.

AI measures in Budget 2027 that reach an SME

Measure What it is Status in October 2026
MDEC AI and automation fund RM30 million to help 4,000 MSMEs adopt AI and automate, plus training Announced, no application rules yet
AI subscription tax relief AI subscriptions for personal use added to individual lifestyle relief Proposed, from YA 2027
Free AI subscriptions 100,000 more free subscriptions, aimed at young Malaysians Announced, distribution unclear
Accelerated Capital Allowance 20% initial and 40% annual on ICT equipment and software, for companies Proposed extension to 31 Dec 2030
AI Malaysia Berhad About RM15 million for the safe and ethical AI ecosystem Not a business grant
AI workforce 5,000 AI professionals certified, 200,000 AI-skilled by 2030 Training programmes, not a grant

The Geran Digital PMKS MADANI, which listed AI as an eligible category, is not on this list because it closed to new applications on 6 September 2025.

The MDEC fund: RM30 million for 4,000 MSMEs

The same allocation also trains and certifies 5,000 AI professionals, so it is not all paid to businesses. Dividing RM30 million by 4,000 gives RM7,500, but that is arithmetic, not an announced amount. The help each business receives could be much smaller or take another form. The speech did not say whether it will be a matching grant, a voucher for approved vendors, or a subsidised programme. MDEC has not published eligibility or an application date.

What to do now: nothing that depends on it. If you want to automate something in 2027, cost it at full price and treat the fund as a possible rebate. When MDEC publishes the rules, the businesses that already know what they want to automate will be ready to apply.

Tax relief on AI subscriptions

The Budget 2027 tax measures propose adding subscriptions to AI software and apps for your own use, your spouse’s or your child’s to the individual lifestyle relief from YA 2027. The lifestyle cap stays at RM2,500 and is shared with books, a computer or phone, and internet subscriptions.

This is a personal relief for personal use. It is not a way to claim a business tool, and the same subscription cannot be claimed twice:

  • A tool the business uses should be paid by the business and deducted as a business expense. For a Sdn Bhd that means the company pays.
  • A tool you use personally can count toward your lifestyle relief, within the RM2,500 cap.

A sole proprietor’s business expenses and personal reliefs both sit on the same personal tax return, which makes the split easy to blur. Keep business and personal subscriptions on separate accounts and ask your tax agent where each one goes.

The allowance for AI systems you buy or build

The Accelerated Capital Allowance gives companies a 20% initial and 40% annual allowance on ICT equipment, software packages and customised software development, which clears the cost within two years of assessment. Budget 2027 proposed extending it from 31 December 2026 to 31 December 2030. A monthly AI subscription is a revenue expense, not capital, so the ACA applies to AI systems you buy outright or have built, not to tools you rent. Our website tax deduction guide explains how the allowance works.

For the grants and programmes Budget 2027 touched, see our SME grants guide for 2027.

The AI change nobody budgeted for: customers use it to find you

The adoption money is about SMEs using AI. The bigger change for most businesses is customers using it. Google AI Overviews now answer many searches directly, and some buyers ask ChatGPT or similar tools for a shortlist before they visit a website. When those answers name a few suppliers and you are not one of them, AI inside your business does not bring that customer back.

Google says there are no extra requirements and no special optimisation needed to appear in AI Overviews or AI Mode, and inclusion is never guaranteed. Normal SEO best practice is what applies. In our experience, a few content habits make pages easier to quote in any answer, AI or not: answering the question in the first paragraph, sections that make sense on their own, tables for comparisons, and clear authorship. These are good practice, not a published selection formula.

Content and optimisation work is normally a deductible marketing expense, and a site rebuild can fall under the capital allowance rules.

Our AI SEO guide covers these practices in detail, and our AI search optimisation service does the work for you.

What to do before 31 December 2026

  1. Decide what you would automate if the MDEC fund paid part of it, and get a quotation at full price so you are ready when the rules come out.
  2. Separate business and personal AI subscriptions. Business tools are a business expense. Personal subscriptions may count toward the lifestyle relief from YA 2027. Do not claim the same one twice.
  3. Ask an AI tool about your own category. Type “best [your service] in [your city]” into ChatGPT or Google and see whether you appear. If not, that is a useful job for 2027.

Our Budget 2027 guide for SMEs covers the tax cut, minimum wage and E-Commerce Bill alongside these AI measures.

Frequently asked questions

How much will each SME get from the MDEC AI fund?

Not published. RM30 million across 4,000 businesses averages RM7,500, but the fund also pays for training, and MDEC has not said whether it is a grant, a voucher or a programme, or who qualifies.

Is ChatGPT tax deductible in Malaysia?

For a business that uses it, yes, as a business expense. For an individual using it personally, Budget 2027 proposes adding AI subscriptions to the lifestyle relief from YA 2027, within the RM2,500 cap. One subscription cannot be claimed both ways.

Is there a grant for AI tools right now?

Not a general one. The Geran Digital PMKS MADANI, which covered AI packages, closed to new applications on 6 September 2025. The MDEC AI fund has no application rules yet.

Does the ACA cover AI software?

For companies, it covers software packages and customised software development you buy or have built. A monthly subscription is a revenue expense and is deducted in full instead.

What is AI search optimisation?

Making your website easier for Google AI Overviews, ChatGPT and similar tools to find and quote when someone asks about your category. It builds on normal SEO. Google states that no special optimisation is required, and no one can guarantee inclusion.

Sources: Ministry of Finance, Budget 2027 speech and tax measures, Appendices 6 and 28; Google Search Central, AI features and your website. Checked 18 October 2026.