Budget 2027: Tax Measures for Sabah SMEs
A practical breakdown of proposed changes tabled on 9 October 2026, comparing current YA2026 rules against proposed YA2027 treatment.
Budget proposals are subject to legislation
The measures listed below were tabled during the Budget 2027 presentation on 9 October 2026. Proposed amendments become binding law only after the Finance Bill is passed by Parliament and gazetted in the Federal Gazette. Do not alter your tax filing basis until official gazette or LHDN operational guidelines are issued.SME Corporate Tax: YA2026 vs YA2027
Comparison for eligible resident companies with paid-up capital of RM2.5 million or less and annual gross sales up to RM50 million.
SME Corporate Income Tax Rate Comparison
| Chargeable Income Bracket | YA2026 (Current) in effect | YA2027 (Proposed) budget proposal | Net Change |
|---|---|---|---|
| First RM 150,000 | 15% | 14% | ↓ 1% reduction |
| RM 150,001 – RM 600,000 | 17% | 16% | ↓ 1% reduction |
| Exceeding RM 600,001 | 24% | 24% | No change (24%) |
Measures by Business Structure
Budget 2027 Tabled in Parliament
Budget 2027 was formally presented in Dewan Rakyat on 9 October 2026.
e-Invoice Annual Turnover Exemption Threshold
Conflicting reports regarding exemption threshold (RM1m vs RM3m). Awaiting official gazette/LHDN circular.
e-Invoice Relaxation Period for Micro & Small Enterprises
Relaxation period for businesses with turnover up to RM5m reported as extended to 31 Dec 2027.
Small-Value Asset Capital Allowance Threshold
Proposed increase in small-value asset write-off limit per asset.
SME Definition for Preferential Tax Treatment
Paid-up capital of RM2.5m or less and gross business income up to RM50m.
SME Corporate Income Tax Rate Reduction
Proposed reduction of 1% on the first two chargeable income brackets for eligible SMEs.
Are you registered as a Sole Proprietorship?
Read our in-depth Sabah Sole Proprietor guide covering allowable business deductions, Form B filing, and personal tax relief planning under YA2027.
Read Sole Proprietor GuideRunning a Sdn Bhd in Kota Kinabalu?
Learn how to maximize your small-value asset allowances, comply with Form C submission deadlines, and prepare for CP204 tax revisions.
Read Sdn Bhd Compliance GuideNeed to evaluate how Budget 2027 impacts your tax planning?
Our Sabah accounting consultants provide clear projections for both Sdn Bhd companies and sole proprietorships. Let us help you plan for YA2027 with confidence.