Budget 2027 Tax Relief Could Save Five Million Taxpayers Up To RM1,600 Annually — CIMB Securities
KUALA LUMPUR, Oct 11 (Bernama) – Budget 2027’s personal income tax relief measures could provide annual tax savings of up to RM1,600 for approximately five million taxpayers, supporting middle-income consumption, said CIMB Securities Sdn Bhd.
In a research note today, it said the budget delivered more generous personal income tax relief than expected, raising the basic individual tax relief from RM9,000 to RM12,000 and reducing tax rates by one percentage point for chargeable income between RM70,001 and RM150,000.
“Businesses also stand to benefit from lower micro, small and medium enterprise (MSME) corporate tax rates and expanded sales tax recovery on qualifying machinery and production inputs,” it added.
CIMB Securities said manufacturers would be allowed to reclaim sales tax on machinery, spare parts and equipment purchased from local traders or distributors.
The facility would also cover raw materials used in the production of pharmaceutical products, animal feed, fertilisers and pesticides, it said.
Overall, it said Budget 2027 supports household incomes and investment while maintaining fiscal discipline, although higher wages pose margin risks for labour-intensive businesses.
The government’s 2027 fiscal deficit target of 3.3 per cent of gross domestic product (GDP) is slightly better than its forecast of 3.4 per cent, despite the upward revision in the 2026 deficit to 3.6 per cent, said CIMB Securities.
“We view Budget 2027 as positive for the consumer sector over the longer term, supported by targeted cash assistance, tax reliefs and other measures aimed at easing living costs, boosting disposable income and sustaining domestic consumption,” it said.
CIMB Securities said incremental spending is likely to favour essentials, affordable food and beverages (F&B) and value-focused retail, benefitting retailers such as 99 Speed Mart, Eco-Shop, AEON and MR D.I.Y.
There would also be spillover benefits to consumer staples producers, including Nestlé Malaysia, QL Resources and Life Water.
Meanwhile, it said the 17.6 per cent increase in the minimum monthly wage to RM2,000 from June 2027, at the upper end of its expectations, would benefit more than four million workers, although MSMEs with annual sales below RM50 million are exempted.
The increase could raise labour costs for retailers and F&B operators, particularly those with labour-intensive operations.
“The impact could extend beyond minimum-wage earners as companies may need to adjust other salary bands to maintain pay differentials. Nevertheless, higher wages should support household purchasing power and consumption over the longer term,” it said.
CIMB Securities said higher minimum wages would also raise costs for labour-intensive plantation, glove and other manufacturing and services companies, although implementation from June 2027 limits the near-term earnings impact.
Companies that improve labour productivity through greater efficiency and automation should be better positioned to offset rising labour costs, it said.
On investment, the research house said the RM83 billion development expenditure allocation and continued infrastructure investment favour construction players, while housing incentives and Johor connectivity improvements should benefit property companies.
Renewable energy and technology companies should also benefit from extended green investment incentives and semiconductor funding.
“We view Budget 2027 as neutral to mildly positive for Malaysian equities.
“Overall, we expect the minimum wage increase to have a limited direct impact on aggregate FTSE Bursa Malaysia KLCI earnings in 2027.
– BERNAMA