Budget 2027 was tabled on 9 October 2026. For SMEs, it cuts the MSME income tax rate by one percentage point from YA 2027, raises financing and guarantees to RM57 billion, and lifts the minimum wage to RM2,000 from June 2027, with MSMEs below RM50 million in sales exempt for now. For online sellers, the main item is an E-Commerce Bill due at the next Parliament sitting. E-invoicing rules did not change.

Budget measures are proposals until the Finance Bill and the related rules are passed, so treat the dates below as the government’s announced timeline.

Budget 2027 at a glance for SMEs

Measure	What changes	Who it affects
MSME income tax	15% to 14% on the first RM150,000, and 17% to 16% on RM150,001 to RM600,000, from YA 2027	MSMEs with paid-up capital of RM2.5 million or less and sales of up to RM50 million
Minimum wage	RM1,700 to RM2,000 a month from June 2027	Employers. MSMEs with sales below RM50 million are exempt for now
Financing and guarantees	RM50 billion to RM57 billion, including up to RM32 billion in SJPP and CGC guarantees	SMEs and mid-tier companies
Microfinancing	RM6.6 billion through AIM, TEKUN Nasional and BSN	Micro businesses
Accelerated Capital Allowance	Extended to 31 December 2030 for ICT equipment and software, and local plant and machinery	Businesses buying qualifying assets
Small-value assets	Capital allowance limit per asset raised to RM3,000	All businesses
E-Commerce Bill	To be tabled at the next Parliament sitting	Online platforms and sellers
Halal certification	Matching grant of up to RM5,000 for first-time applicants	MSMEs seeking halal certification

What the MSME tax cut is worth

The cut applies to chargeable income, which is your profit after allowable expenses, not your sales.

Chargeable income	Tax saved per year
RM150,000	RM1,500
RM300,000	RM3,000
RM600,000	RM6,000 (RM99,000 down to RM93,000)

Income above RM600,000 is still taxed at 24%. The MSME rates also have ownership conditions, so confirm your status with your tax agent before you budget for the saving.

Sole proprietors and partners pay tax at personal rates instead. For them, Budget 2027 raises individual relief from RM9,000 to RM12,000 and cuts several resident tax bands by one percentage point. The lifestyle relief now covers AI subscriptions, which helps owners who pay for AI tools personally.

The E-Commerce Bill: what online sellers should expect

The government says the bill will make online platforms and sellers more accountable and protect local MSMEs from unfair competition by unregulated foreign e-commerce operators. The text has not been published yet, so nobody outside government knows the exact obligations.

You can prepare without guessing. Online sellers already have duties under the Consumer Protection (Electronic Trade Transaction) Regulations 2024, which replaced the 2012 regulations on 25 December 2024. If your store meets them today, you are well placed for whatever the new law adds:

Show who you are. Display your business name, address, email and phone number on your store and marketplace profiles.
Describe products accurately. List the main features, any required safety certification, and the full price including shipping and taxes.
Publish your terms. Show payment methods, terms of sale and delivery estimates before the buyer pays.
Confirm every order. Let buyers correct their order, and send an order confirmation automatically.
Keep records. Keep order and transaction records for at least three years.

The 2024 rules also require disclosures in Bahasa Malaysia, though KPDN deferred enforcement of that part in June 2025. Our E-Commerce Bill guide covers the rules in detail and will be updated when the bill is tabled.

If your store sits only on a marketplace, a rule change on that platform can cut you off from your customers overnight. Running your own store alongside Shopee or Lazada gives you control over your customer data and your margin. See our ecommerce website service if you are planning one.

RM2,000 minimum wage: who is exempt

The minimum wage rises from RM1,700 to RM2,000 a month from June 2027 and covers more than 4 million workers. MSMEs with sales below RM50 million are exempt, but the government has not said for how long.

Even if you are exempt, expect pressure on salaries. Staff compare offers, and larger employers nearby will pay the new rate. If you are hiring in 2027, model your costs at RM2,000 now.

Companies that are not MSMEs face a second change: from YA 2028, salaries are only tax-deductible if they are paid through a financial institution or by cashless payment.

Spending on your website or systems in 2027

Two measures help if you plan to invest in technology:

Accelerated Capital Allowance (ACA) on ICT equipment and software now runs until 31 December 2030. ACA lets you claim the cost faster than normal capital allowances. Ask your tax agent whether your website, online store or system build counts as qualifying software.
Small-value assets can now be written off at up to RM3,000 per asset, which covers most laptops, phones and point-of-sale hardware.

The Geran Digital PMKS MADANI can also pay up to 50% of a digital service, capped at RM5,000. The Budget 2027 coverage we reviewed did not announce a new allocation for it, so check that the current round is open before you plan around it.

E-invoicing: what did not change

Budget 2027 coverage did not include new e-invoicing measures. The rules that matter come from LHDN, and they changed before the budget:

Businesses with annual turnover below RM3 million are exempt, up from RM1 million, effective 1 September 2026.
Phase 4 businesses, with turnover from RM3 million to RM5 million, have a relaxation period until 31 December 2027.

That makes 2027 the last year to get e-invoicing right before enforcement. Our e-invoice guide for 2027 covers the phases, the exemption conditions and a timeline.

Financing if you need working capital

SJPP and CGC guarantees of up to RM32 billion. The SJPP guarantee limit rises to RM50 million and is now open to mid-tier companies in all sectors.
Bank Negara Malaysia adds RM5 billion to its fund for SMEs affected 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 platforms. Stamp duty on P2P financing agreements is capped at RM10 from 2027 to 2030.
RM1 billion in export financing from BPMB, plus RM60 million for MATRADE to help companies enter new overseas markets.

What to do before 31 December

Re-estimate your YA 2027 tax at the new MSME rates with your accountant.
Confirm your MSME status. Check your paid-up capital, sales and ownership against the definition.
Review your online store against the e-commerce regulations above.
Plan your 2027 technology spending around ACA, the small-value asset limit and the digital grant.
Confirm your e-invoice position. Find out whether you are exempt or in Phase 4, and how you will issue e-invoices.
Budget for wages. If you plan to hire, cost each new role at RM2,000 a month or more.

Frequently asked questions

When does the MSME tax cut start?

From the 2027 year of assessment (YA 2027), once the Finance Bill is passed. It applies to MSMEs with paid-up capital of RM2.5 million or less and annual sales of up to RM50 million.

Does the RM2,000 minimum wage apply to small businesses?

Not immediately. MSMEs with sales below RM50 million are exempt when the new rate starts in June 2027. The length of the exemption has not been announced.

Did Budget 2027 change e-invoicing?

No. The changes that matter came from LHDN before the budget: the exemption threshold rose to RM3 million on 1 September 2026, and Phase 4’s relaxation period runs until 31 December 2027.

What is the E-Commerce Bill?

It is a proposed law, announced in Budget 2027, to make online platforms and sellers more accountable and protect local MSMEs from unregulated foreign competition. It will be tabled at the next Parliament sitting, and its details are not yet public.

If you are planning a new online store or want to move off marketplaces in 2027, talk to us about the build and the grant.

Sources: Budget 2027 coverage by The Star, Free Malaysia Today and Funding Societies, and the Ministry of Finance Budget portal.

Budget 2027 for Malaysian SMEs and Online Sellers