THE federal government’s revised revenue is projected to grow by 2.9% to RM334.1bil this year compared to 2024, on account of the government’s continuous efforts to widen the tax base.
The Fiscal Outlook 2026 report noted that tax revenue remains the major contributor, with a share of 75.8% of total revenue or 12.6% of gross domestic product.
Non-tax revenue projections have been lowered to an estimated RM80.7bil, constituting 24.2% of total revenue, while direct tax revenue projections have been estimated to improve by 3.2% to RM177.1bil, primarily attributed to higher collections from individual and companies income taxes at RM141.9bil.
The government projects an increase of 9.1% in individual income tax to RM44.9bil, in tandem with a 13% rise in number of registered individual taxpayers, underpinned by stable wage growth, low unemployment rate and the salary adjustment for civil servants under the Public Service Renumeration System.
Likewise, revenue from companies income tax is also expected to expand by 4.6% to RM97bil on the back of better corporate earnings in the 2024 financial year, mainly from the services and manufacturing sectors.
Additionally, the phased implementation of the e-invoicing beginning August 2024, is expected to further reduce leakages and improve compliance, thus contributing to higher revenue collection.
As at end-August 2025, the number of corporate taxpayers rose by more than 15% as compared to 2024.
Similarly, other direct taxes, mainly stamp duties and the real property gains have been projected to increase to RM10.1bil and RM2.3bil, respectively, supported by higher property market values.
According to the National Property Information Centre, property values in the first half of financial year 2025 grew by 1.9% relative to the corresponding period in 2024.
Meanwhile, the government projects indirect tax to grow by a further 11.3% to RM76.3bil, driven by higher collection from the sales and service tax.
The growth is mainly bolstered by service tax, which is anticipated to surge by 26.1% to RM29.3bil following the full-year implementation of the service tax rate at 8%, coupled with the wider scope of taxable services, such as logistics, rental or leasing of goods and premises, as well as selected financial services.
Likewise, sales tax collection is estimated to grow by 12% to RM24.1bil, supported by robust private consumption and the impact from the expansion of sales tax on selected goods.
Non-tax revenue is estimated to decrease to RM80.7bil in 2025, consistent with the government’s focus to reduce reliance on unsustainable revenue streams.
