Kota Kinabalu: The Sabah Association of Professional Accountants (SAPA) sees the 2025 Federal Budget as a step towards reducing development gaps.
Vice President Chu Vun Henn (pic) said the Budget also aims to improve infrastructure and digital connectivity in the state.
SAPA was encouraged that the budget focuses on infrastructure development and sector-specific tax incentives, particularly for tourism, agriculture and food security, all crucial to Sabah’s economy.
Key highlights for Sabah include RM6.9 billion for development, a RM600 million special grant, RM1.2 billion for electricity supply, and RM765 million for the southern line transmission project.
The budget also allocates RM1 billion for water projects, including pipe installations in Tawau and pipe replacements in Kota Kinabalu, Penampang and Putatan.
Other provisions include upgrades to the Kota Kinabalu and Tawau airports, as well as continued development of major highways such as the Pan Borneo Sabah, Sarawak–Sabah Link Road, and the Kalabakan–Simanggaris border link.
A major investment of RM2 billion will go into the Madani Submarine Cable project to enhance digital connectivity linking Sedili (Johor) to Kuching and Sibu (Sarawak), and further to Tuaran, Kudat, Pulau Banggi, Sandakan and Tawau in Sabah.
“Improved access and connectivity are critical enablers of economic growth and business resilience, especially for businesses in Sabah,” he said.
SAPA is also encouraged by the budget’s fiscal incentives, particularly those supporting tourism and agriculture.
Among them are tax deductions of up to RM500,000 on the cost of renovation and refurbishment for tourism project operators, and a 100 per cent tax exemption on incremental income from inbound tourism packages (2026–2027).
Other tax incentives include deductions for organising international incentive trips, conferences and trade exhibitions; a RM1,000 personal tax relief for entrance fees to local tourism and cultural attractions as we prepare for Visit Malaysia Year 2026.
“However, clear guidelines must be issued early to ensure smooth implementation.”While SAPA appreciates the government’s investment in digital infrastructure, Chu stressed the importance of aligning the timeline for mandatory e-Invoice implementation with the actual readiness of Sabah’s digital infrastructure.
“We encourage the Inland Revenue Board (IRB) and Ministry of Finance (MOF) to consider extending the compliance deadline for SMEs in Sabah and to temporarily waive penalties for early adopters until infrastructure improvements are in place,” he added.
SAPA also supports the budget’s stamp duty measures, including the extension of stamp duty exemption for first-time homebuyers (for properties up to RM500,000).
The increase in wage threshold for employment contract stamp duty exemption from RM300 to RM3,000 per month effective 1 January 2026 also aligns well with the current business landscape.
