As Malaysia prepares to table Budget 2026 on 10 October, the Majlis Datuk Dato’ Malaysia (MDDM) has voiced strong support for the Government’s MADANI Economy direction, while urging for greater fiscal stability, consistency, and predictability in upcoming policy reforms.
The organisation, which represents senior leaders across industries, believes that clarity and continuity in tax policy will be key to sustaining investor confidence and unlocking long-term growth.
Stability Over Surprise: Businesses Seek Predictable Tax Policy
MDDM President Datuk Samson David Maman emphasised that Budget 2026 must reflect a mature partnership between government and business.
“We commend the Government for its discipline in reducing the fiscal deficit year after year. However, what truly unlocks Malaysia’s growth is clarity and consistency. Businesses can plan for challenges — but not for uncertainty or sudden taxes,” he said.
Malaysia has made visible progress in narrowing its fiscal deficit from 5% of GDP in 2023 to 4.1% in 2024, with a target of 3.8% for 2025. Yet, MDDM warned that without a broad-based tax structure like the former Goods and Services Tax (GST), the country risks relying on ad-hoc taxes that erode business confidence.
Call for Simplicity, Not Surprise Taxes
Following the abolition of GST in 2018, Malaysia has seen a series of new measures — including capital gains tax, dividend taxes, and expanded Sales and Service Tax (SST) coverage. MDDM cautioned that while these raise short-term revenue, they add complexity and uncertainty for long-term planning.
“Businesses are not resistant to taxation. What they need is certainty and simplicity,” said Datuk Samson. “Each new or surprise levy sends ripples through the market. Revenue growth should come from expanding the economic base, not by taxing the same activities in new ways.”
MDDM also highlighted that the cascading nature of SST increases operational costs, especially for industries like construction and logistics, where multi-layered supply chains are common. The group proposed longer transition periods and clear tax roadmaps to minimise disruption.
Avoiding Double Taxation and Supporting SMEs
Dato’ Lock Peng Kuan, Chair of MDDM’s Economy Committee and Managing Partner at Baker Tilly Malaysia, stressed that excessive taxation could discourage enterprise and deter investment.
“Raising headline tax rates does not always yield higher revenue. It risks pushing businesses into informal channels or discouraging foreign investors,” he said.
He called for simpler, growth-oriented policies, such as avoiding double taxation on corporate profits and dividends, while providing targeted tax relief and financing support for SMEs.
“Predictability is the greatest incentive. When investors trust that the rules will remain consistent, they’re more likely to commit to long-term projects in Malaysia,” Dato’ Lock added.
Supporting Capital Market Growth and Innovation
MDDM also praised Bursa Malaysia for its consultative and responsive approach, which has strengthened Malaysia’s regional market profile. To sustain this progress, MDDM proposed co-investment grants or matching funds to help SMEs and innovative firms prepare for IPOs, expand listings, and fund digital or green economy initiatives.
Such initiatives, MDDM believes, would not only create jobs and wealth but also contribute to higher tax revenues through organic economic expansion.
Key Recommendations for Budget 2026
MDDM’s proposals centre on stability, sustainability, and partnership between government and business. Its recommendations include:
- Clear multi-year tax roadmaps to avoid sudden or retroactive measures.
- Broader yet simpler tax bases to prevent cascading effects.
- Relief and incentives for SMEs and high-growth firms.
- Transition periods for any future SST expansions.
- Non-tax incentives, such as grants, to strengthen capital markets.
- Policies that grow revenue through growth, not piecemeal levies.
A Call for Balanced, Business-Friendly Reform
“The Government has shown fiscal discipline and reform-mindedness,” said Datuk Samson. “Budget 2026 should now demonstrate that discipline can co-exist with inclusivity and competitiveness. A stable, transparent, and predictable system will fuel growth, investment, and trust.”
MDDM reaffirmed its readiness to collaborate with the Government on policy execution and economic reforms under the MADANI Economy framework.
