Federal govt revenue expected to rise 4.7pc to RM380.8b in 2027, says MOF

The Malaysian Federal government anticipates a 4.7% increase in its revenue to reach RM380.8 billion in 2027, according to estimates from the Finance Ministry (MoF). This growth, primarily driven by tax revenue, is expected to account for 78% of the total revenue, or 12.8% of the country's Gross Domestic Product (GDP). Non-tax revenue is projected to grow by 1.1% to RM83.7 billion, equivalent to 3.6% of GDP.

Petroleum-related revenue is forecast to reach RM61.2 billion, or 16.1% of total revenue, thanks to a higher RM32 billion dividend from Petroliam Nasional Bhd (Petronas), while non-petroleum revenue is expected to increase by 3.5% to RM319.6 billion. For 2026, petroleum-related revenue is anticipated to dip to 15.1% of total revenue, or 2.5% of GDP, due to a lower Petronas dividend of RM27 billion, despite a higher global crude oil price projection of US$85 per barrel.

Non-petroleum revenue is then projected to grow to RM308.7 billion, bolstered by stronger tax collections and the impact of ongoing revenue reform measures.

In 2026, federal government revenue is expected to rise by six percent to RM363.6 billion, an 8.2% increase from 2025, fueled by better-than-expected economic performance and higher average global crude oil prices. Tax revenue, accounting for 77.2% of the total, remains the largest contributor to overall revenue collection, equivalent to 12.8% of GDP. Non-tax revenue is estimated to be RM82.9 billion, representing 22.8% of total revenue.

Direct tax is projected to grow by 4.6% to RM199.9 billion, or 67.3% of total tax revenue in 2027, supported by improved income tax collection and the phased rollout of e-Invoice. Corporate income tax (CITA) is expected to grow by 4.8% to RM106.6 billion, while individual income tax is forecast to increase by 6.2% to RM51.8 billion.

The stamp duty is anticipated to rise by 5.6% to RM12.4 billion due to the transition to the Stamp Duty Self-Assessment System (STSDS). Petroleum income tax (PITA) is expected to remain stable at RM20.5 billion, while indirect tax collection is projected to grow by 8.3% to RM97.2 billion, driven by steady business and consumption activities.