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FEDERAL government revenue is projected to rise 4.7% to RM380.8 billion in 2027, with higher tax collections expected to offset modest growth in non-tax income, according to the Finance Ministry.
In its Fiscal Outlook and Federal Government Revenue Estimates 2027 report released today, the ministry said tax revenue would increase 5.8% to RM297.1 billion, accounting for 78% of total revenue.
Non-tax revenue is forecast to grow 1.1% to RM83.7 billion.
The government expects petroleum-related revenue to reach RM61.2 billion next year, or 16.1% of total revenue, on the back of a RM32 billion dividend from Petroliam Nasional Bhd (Petronas), assuming global crude oil prices remain stable.
Non-petroleum revenue is projected to increase 3.5% to RM319.6 billion.
For 2026, federal revenue is estimated at RM363.6 billion, 6% above the original budget estimate and 8.2% higher than in 2025.
The ministry attributed the increase to better-than-expected economic performance and higher average global crude oil prices.
Tax revenue is expected to reach RM280.7 billion this year, representing 77.2% of total collections, while non-tax revenue is projected at RM82.9 billion.
Direct taxes remain the main revenue source
Direct tax collections are forecast to rise 4.6% to RM199.9 billion in 2027, accounting for 67.3% of total tax revenue.
The ministry said stronger income tax collections would be supported by increased taxpayer registration following the phased introduction of e-invoicing, as well as improved enforcement and audits.
Corporate income tax is projected to grow 4.8% to RM106.6 billion, while individual income tax collections are expected to increase 6.2% to RM51.8 billion on the back of continued wage growth and low unemployment.
Stamp duty revenue is forecast to rise 5.6% to RM12.4 billion as the government rolls out the Stamp Duty Self-Assessment System, including for property transfer instruments from Jan 1, 2027.
Petroleum income tax is expected to remain unchanged at RM20.5 billion.
SST collections to rise on sustained consumption
Indirect tax revenue is projected to increase 8.3% to RM97.2 billion next year, supported by continued business activity and domestic spending.
The sales and service tax (SST) is expected to contribute RM73.3 billion, comprising RM30.9 billion in sales tax and RM42.4 billion in service tax.
The ministry attributed the projected 9.5% increase in SST collections to sustained private consumption and spending associated with major events, including Visit Malaysia 2026-2027 and the 34th SEA Games, which Malaysia is due to host in 2027.
Excise duty collections are expected to remain at RM11.8 billion, with tax exemptions for locally assembled electric vehicles continuing until the end of 2027.
Petronas to contribute RM32 billion
Non-tax revenue is expected to edge up to RM83.7 billion in 2027, supported by investment income and other receipts.
Petronas is projected to contribute RM32 billion, while Bank Negara Malaysia is expected to pay RM7 billion and Khazanah Nasional Bhd RM3 billion.
The government also expects RM6 billion from the Retirement Fund (Incorporated) (KWAP) to help finance pension obligations.
Revenue from licences and permits is forecast at RM17.2 billion, including RM6.7 billion in petroleum royalties.
Motor vehicle licence collections are expected to bring in RM3.3 billion, while levies on foreign workers are projected at RM3.7 billion.
For 2026, petroleum-related revenue is estimated to account for 15.1% of total revenue, or 2.5% of GDP, as the Petronas dividend falls to RM27 billion from RM32 billion in 2025.
The ministry expects non-petroleum revenue to reach RM308.7 billion this year, supported by stronger tax collections and the continued impact of revenue reforms. – October 9, 2026
