Farah Rosley is the Malaysia Tax managing partner at Ernst & Young Tax Consultants Sdn Bhd.
BUDGET 2026 marked a significant milestone in the journey toward sustainable and inclusive growth as Malaysia unveiled its largest-ever budget of RM470bil. In alignment with the 13th Malaysia Plan (13MP), Budget 2026 signals a strategic shift from stabilisation to transformation, with ESG principles being central to fiscal strategy and national development.
The introduction of a carbon tax, set to take effect in 2026, is a bold and necessary step. Taking a step-by-step approach by starting with specific sectors, that include iron, steel and energy, Malaysia is aligning itself with global climate standards and signaling to industries that environmental costs must be factored into business decisions. This move complements the broader climate agenda, including the National Carbon Market Policy and the anticipated Climate Change Bill.
