5 Business Tax Incentives in Malaysia You Must Claim in 2026

Author: Christopher Yip

Date Published: 5 February 2026

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I have many years experience in the software and internet industry. Since 2009, my team and I have helped organizations simplify daily work with practical software solutions - so teams can move faster, reduce manual work, and scale with better control.

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Malaysia’s Budget 2026, also known as the Fourth MADANI Budget: A Budget for the People, was tabled on 10 October 2025 with a strong focus on supporting SMEs, startups and corporate growth through targeted tax incentives and strategic reforms. By combining incentives for digital adoption, talent development, tourism, investment and sustainability, the Government aims to boost competitiveness and long-term resilience across Malaysian businesses.

Below are 5 key business tax incentives from Budget 2026 that every Malaysian entrepreneur should understand and claim this year to unlock tax savings and strategic advantages.

1. Accelerated Capital Allowance for Digitalisation & Machinery

👉 What it is:

Companies can claim Accelerated Capital Allowance (ACA) on qualifying capital expenditure for ICT equipment, plant & machinery, allowing the full write-off of costs within two years instead of the standard life span.

✅ Purpose: Encourages digital transformation, automation and investment in productivity-enhancing technology.

✅Qualifying assets: Computer hardware, software, servers, network equipment, robotics & related machinery used for business purposes.

📌How to claim:

  • Record qualifying capital expenditure in your accounting books (invoice date = date asset is ready for use).

  • Include ACA claim in Schedule 3 of your corporate tax return (Form C or C-S) for the relevant year of assessment.

  • Attach supporting documents (invoices, receipts, evidence of use in business operations).

  • Ensure expenditure is between 11 Oct 2025 and 31 Dec 2026 to be eligible.

Why it matters: Faster write-offs means lower taxable income earlier, freeing up cash flow for re-investment.

2. 50% Additional Deduction for AI & Cybersecurity Training

👉 What it is:

SMEs investing in AI and cybersecurity training recognised by the MyMahir National AI Council for Industry (NAICI) can claim a 50% additional tax deduction on eligible training costs - on top of the normal deduction.

✅ Who qualifies: MSMEs that undertake eligible training programmes between 1 Jan 2026 – 31 Dec 2027.

📌 How to claim:

  • Enrol employees in NAICI-recognised AI or cybersecurity courses.

  • Collect certification & receipts showing course fees and certificates of completion.

  • When filing your corporate tax return, include both the normal deduction and the additional 50% deduction on the training expenditure schedule.

  • Keep evidence of recognition from MyMahir/NAICI for audit purposes.

Why it matters: Upskilling digital talent is expensive, this incentive improves ROI by reducing taxable profit further.

3. Green Investment Tax Allowance (GITA)

👉 What it is:

Businesses investing in certified green technology products (e.g., energy-efficient systems, low emission tech) can qualify for a 100% Green Investment Tax Allowance (GITA), meaning full deduction of qualifying green costs against taxable income.

✅ Goal: Promote adoption of sustainable and energy-efficient technologies as part of digital transformation.

✅ Typical targets: Local supply chains adopting MyHIJAU Mark certified products to reduce carbon footprint.

📌 How to claim:

  • Invest in eligible MyHIJAU Mark-certified green tech.

  • Maintain purchase & installation receipts.

  • Include GITA claims in your corporate tax return’s allowance schedules.

  • Retain supporting documentation showing the asset’s green certification.

Why it matters: Helps offset the costs of making your operations both digital and environmentally sustainable.

4. Reinvestment & Automation Incentives

👉 What it is:

Budget 2026 continues to strengthen reinvestment allowances and automation incentives tied to digital and Industry 4.0-aligned investments, including expenditures on machinery, automation systems, and digitalisation improvements.

✅ Purpose: Encourages businesses to reinvest profits in upskilling, automation and digital growth.

✅ Scope: Includes automation tech, digital systems integration, and related digital tools.

📌 How to claim:

  • Categorise qualifying reinvestment costs (e.g., automation equipment, digital system licenses).

  • When filing your corporate tax return, claim the relevant Reinvestment Allowance (RA) in the capital allowance schedule.

  • Provide project plans, vendor invoices, and proof of installation/use.

  • Ensure proper documentation aligns with Inland Revenue Board (LHDN) guidelines.

Why it matters: This allows businesses to reinvest in modernization while reducing taxable income.

5. Digital Compliance Requirements (E-Invoicing)

👉 What it is:

Although not a direct tax deduction, mandatory e-invoicing by mid-2026 improves tax compliance and reporting efficiency - an important part of digital transformation and tax management.

📌 How to claim:

  • Implement e-invoicing software (ERP, accounting platforms, or third-party solutions).

  • Ensure your systems integrate with LHDN requirements before the enforcement date.

  • Keep e-invoicing records for tax audits and compliance.

Why it matters: Digital compliance reduces errors, speeds up reporting, and enables smoother audits, indirectly saving time and cost.

Business Tax Incentives Claiming Best Practices

To ensure you can maximise claims and reduce rejection risk:

  • Document thoroughly: Invoices, receipts, training completions, certification, and asset usage logs are critical.

  • Engage your Accountant: Professionals familiar with LHDN practice notes can help structure claims correctly.

  • Time your investments: Some incentives (like ACA) are tied to specific expenditure windows.

  • Consult official sources: Periodically review MOF, LHDN and TalentCorp/MyMahir NAICI guidance for updated claim procedures.

Why These Incentives Are Important for Malaysian Businesses

Budget 2026 isn’t just about short-term tax relief, it’s part of a broader strategy under the Ekonomi MADANI framework to:

  • Foster digital adoption

  • Strengthen workforce skills

  • Boost international competitiveness

  • Support key sectors like tourism and innovation

  • Encourage sustainable, high-value investment

These incentives help Malaysian businesses reduce tax burdens, accelerate digital transformation, and invest confidently in future-ready capabilities.