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

KUALA LUMPUR, Oct 9 — Federal government revenue is estimated to rise 4.7 per cent to RM380.8 billion in 2027, assuming resilient, albeit moderating economic growth, the Finance Ministry (MoF) said.

The higher estimate, mainly from tax revenue, is projected to grow 5.8 per cent to RM297.1 billion, or 78 per cent of total revenue, or 12.8 per cent of gross domestic product (GDP), MoF said.

“Meanwhile, non-tax revenue is anticipated to grow marginally by 1.1 per cent to RM83.7 billion, or 3.6 per cent of GDP,” the MoF said in its Fiscal Outlook and Federal Government Revenue Estimates 2027 released today.

Assuming average global crude oil prices remain stable in 2027, MoF said petroleum-related revenue is expected to reach RM61.2 billion, or 16.1 per cent of total revenue, due to a higher RM32 billion dividend from Petroliam Nasional Bhd (Petronas).

“Non-petroleum revenue is estimated to increase 3.5 per cent to RM319.6 billion,” it said.

For 2026, MoF said petroleum-related revenue is estimated to drop to 15.1 per cent of total revenue, or 2.5 per cent of GDP, due to a lower Petronas dividend of RM27 billion (2025: RM32 billion), despite a higher average global crude oil price projection of US$85 per barrel.

“Consequently, non-petroleum revenue is projected to grow to RM308.7 billion, bolstered by stronger tax collections, mirroring the continued positive impact of ongoing revenue reform measures,” it said.

On federal government revenue in 2026, MoF said it is projected to rise by six per cent to RM363.6 billion, an 8.2 per cent increase from 2025, driven by better-than-expected economic performance and higher average global crude oil prices.

MoF said tax revenue at RM280.7 billion remains the largest contributor to overall revenue collection at 77.2 per cent, equivalent to 12.8 per cent of GDP in 2026.

“Meanwhile, the non-tax revenue is expected at RM82.9 billion, representing 22.8 per cent of total revenue,” it said.

Direct Tax

MoF said direct tax is forecast to rise by 4.6 per cent to RM199.9 billion, or 67.3 per cent of total tax revenue in 2027, on the back of improved income tax collection.

This is supported by encouraging registration of taxpayers resulting from the phased rollout of e-Invoice.

The largest component of direct tax, corporate income tax (CITA), constitutes 53.3 per cent of total direct tax. It is expected to grow by 4.8 per cent to RM106.6 billion.

“Likewise, the individual income tax is estimated to increase by 6.2 per cent to RM51.8 billion, in anticipation of continuous wage growth and a low unemployment rate,” it said.

Furthermore, MoF said greater enforcement and taxpayer audits before e-Invoice implementation will contribute positively to higher collection.

The other direct tax component, namely stamp duty, is expected to rise by 5.6 per cent to RM12.4 billion in tandem with the gradual transition to the Stamp Duty Self-Assessment System (STSDS), particularly for property transfer instruments effective Jan 1, 2027.

Moreover, this digitalisation shift, accompanied by better enforcement, is expected to enhance tax compliance.

The petroleum income tax (PITA) is expected to remain stable at RM20.5 billion.

Indirect Tax

MoF said indirect tax collection is estimated to grow further by 8.3 per cent to RM97.2 billion in 2027, driven by steady business and consumption activities.

The RM73.3 billion sales and service tax (SST), at 3.2 per cent of GDP, is the main contributor to indirect tax collection. Of this total, sales tax and service tax are forecast to be higher at RM30.9 billion and RM42.4 billion, respectively.

“The higher SST estimates by 9.5 per cent are in tandem with sustained performance of private consumption, in anticipation of major events to be held in 2027, including the Visit Malaysia 2026-2027 as well as the 34th SEA Games to be hosted here,” it said.

Similarly, excise duty collection is expected to steady at RM11.8 billion, due to duty exemption extended on locally assembled electric vehicles until end-2027.

Meanwhile, non-tax revenue is projected to rise marginally by 1.1 per cent to RM83.7 billion, from investment income and non-revenue receipts.

Investment income will be largely supported by higher contributions from Petronas (RM32 billion), Bank Negara Malaysia (RM7 billion) and Khazanah Nasional Bhd (RM3 billion), it said.

Furthermore, the government also anticipates a sustained RM6 billion contribution from Retirement Fund (Incorporated) (KWAP) to partly finance retirement charges.

MoF also said licences and permits are projected to rise to RM17.2 billion, driven by higher petroleum royalties of RM6.7 billion. Receipts from motor vehicle licences and levy on foreign workers are expected to reach RM3.3 billion and RM3.7 billion, respectively. — Bernama