KUALA LUMPUR: Dividends from PETRONAS are estimated to account for only 5% to 6% of the 2026 Federal Government revenue, says the Finance Ministry.
The ministry added that Putrajaya is not overly dependent on the performance of the national oil company.
“The Federal Government's revenue for 2026 is projected at RM343.1bil, comprising RM270.4bil in tax revenue and RM72.7bil in non-tax revenue. Of this amount, the projected RM20bil dividend from PETRONAS for 2026 is included under non-tax revenue,” it said in a parliamentary written reply dated July 6.
The ministry explained that the fiscal management of the Federal Government comprises not only revenue but also expenditure, borrowing, debt and fiscal risk management.
From the revenue perspective, tax revenue remains the principal source of income for the government, accounting for more than 70% of total Federal Government revenue. Dividends received from PETRONAS represent only around 5% to 6% of the estimated total revenue for 2026, which demonstrates that the government is not overly dependent on the performance of the company.
The ministry said the government remains committed to reducing its reliance on petroleum-related revenue due to the volatility in global crude oil prices.
“Petroleum-related revenue accounted for its highest proportion of total government revenue at 41.3% in 2009. Through the revenue measures implemented since 2023, the share of petroleum-related revenue has been reduced to 17.5% in 2025, compared with 28% in 2022,” it said.
The ministry added that petroleum-related revenue is projected to decline further to 12.5% in 2026.
Putrajaya has also formulated the Medium-Term Revenue Strategy (MTRS), which will be implemented progressively, the ministry said. The government will also be focusing on broadening the tax base and improving tax administration.
To achieve this, the government has undertaken several measures, including the digitalisation of tax administration through the phased implementation of e-Invoicing to improve efficiency and enhance compliance to reduce revenue leakage.
Other measures include the expansion of the scope of the Sales and Service Tax (SST). This includes the introduction of an import sales tax on low-value goods from January 2024 and increasing the service tax rate from 6% to 8% from March 2024.
The government also revised sales tax rates together with the expansion of the service tax scope from July 1, 2025.
Additional measures include expanding the scope of excise duty on sugar-sweetened beverages and revising the export duty on crude palm oil (CPO) to enhance the competitiveness of the palm oil industry of Malaysia.
The government also increased the excise duty on alcoholic beverages by 10% effective Nov 1, 2025, alongside a phased increase in the excise duty on tobacco products.
“Furthermore, fiscal management is not confined to revenue reforms alone. The government is also implementing a range of economic policies under the MADANI Economy framework to further stimulate economic growth,” the ministry said.
It noted that the positive impact of stronger economic growth will, in turn, further strengthen the fiscal position of the country.
The ministry was responding to a question by Ahmad Fadhli Shaari (Perikatan Nasional-Pasir Mas) on plans to reduce fiscal dependence on PETRONAS dividends, given that the dividends received have declined from RM40bil in 2023 to RM20bil in 2026.
Ahmad Fadhli also asked whether the government acknowledges that the current fiscal position remains overly dependent on the performance of a single government-owned company.
