Budget 2027 was tabled on 9 October 2026, and if you run a small business in Malaysia the AI headlines probably made it sound like there is money waiting for you. Some of it is real. Very little of it is a grant you can apply for this month. Most of what a small company can use comes through its tax computation and its training budget, and the most useful single item is an allowance on software that has been extended to the end of 2030.
I have co-run OpenMinds, a Malaysian digital agency, since 2009, so I read the budget the way any SME owner does: what changes for us, and when. I went through the budget speech and the Ministry of Finance’s tax measures document rather than the summaries, because the summaries disagree with each other on the details. I am not a tax adviser. Every tax item below is a proposal until Parliament passes the Finance Bill, so confirm how your own spending is treated with your tax agent.
Everything in Budget 2027 a small business can use for AI
These are the measures that touch a small company spending money on AI tools, custom software or training. The dates come from the Ministry of Finance’s tax measures document, where the two capital allowance changes are Appendices 12 and 28.
| Measure | What changes | Who it covers | When |
|---|---|---|---|
| Accelerated Capital Allowance on ICT and software | ICT equipment, software packages, and consultation, licensing and incidental fees for customised software can be fully claimed within two years | Companies | Spending from 1 January 2027 to 31 December 2030 |
| MSME income tax rate | 15% to 14% on the first RM150,000 of chargeable income, and 17% to 16% from RM150,001 to RM600,000 | MSMEs: companies with paid-up capital, or LLPs with partnership capital, of RM2.5 million or less, and annual sales up to RM50 million | Year of assessment 2027 |
| Small value assets | Each asset can be fully claimed up to RM3,000, up from RM2,000 | Companies. MSMEs have no annual cap; for other companies it rises from RM20,000 to RM30,000 a year | Year of assessment 2027 |
| HRD Corp training | RM3 billion for 3 million skills training opportunities, including continuing professional development | Workers and professionals, through HRD Corp | 2027 |
| MDEC AI fund | RM30 million to help 4,000 MSMEs adopt AI and automate, and to train and certify 5,000 AI professionals | MSMEs | Details not yet published |
| Lifestyle tax relief | Now covers AI software and app subscriptions for personal use, within the existing RM2,500 limit | Individuals, for self, spouse or child | Year of assessment 2027 |
The software allowance is the one most small companies will use
Equipment and software are normally written off over several years through capital allowances. The Accelerated Capital Allowance shortens that to two: a 20 per cent initial allowance and a 40 per cent annual allowance, so the full cost is claimed by the end of the second year. The incentive was due to end on 31 December 2026. Budget 2027 extends it by four years.
The line I would underline is the fourth category in that allowance: consultation, licensing and incidental fees related to the development of customised computer software. That describes most real AI projects in a small company. Somebody builds a tool around how you work, connects it to your systems and charges you for the build. Under this measure, that spending can be claimed faster.
Ask your supplier to itemise the invoice so development, licensing, hosting and monthly subscriptions sit on separate lines. Your tax agent has to decide which bucket each one falls into, and a single lump sum labelled “AI project” makes that harder than it needs to be.
The tax cut is small, and more than 300,000 MSMEs get it
The MSME rate drops by one percentage point on each of the two lower bands. At RM600,000 of chargeable income the saving tops out at RM6,000 a year, which matches the “up to 6,000 ringgit” in paragraph 127 of the speech. A company with RM100,000 of chargeable income saves RM1,000. It has nothing to do with AI, and it is still the change in this budget that most small companies will feel. The speech puts their number at more than 300,000.
The small value asset change works the same way. From year of assessment 2027, a single asset costing up to RM3,000 can be fully claimed in one go, up from RM2,000. Plenty of the laptops and monitors your team works on now fall under that line.
The RM30 million MDEC fund is not open for applications yet
MDEC fund of 30 million ringgit will help 4,000 MSMEs adopt AI and automate their operations. This programme will also train and certify 5,000 AI professionals.
Budget 2027 speech, paragraph 157, 9 October 2026
That is the whole description. As of 16 October 2026, a week after the speech, I could not find eligibility rules, an application window or a programme name from MDEC. Spread the fund evenly across 4,000 businesses and each gets RM7,500, before any of it goes to training those 5,000 professionals. That is useful money for a small firm. It is still no reason to put a project on hold while you wait for the forms. Treat it as a possible top-up to a plan you already have.
HRD Corp training is the door that is already open
HRD Corp gets RM3 billion next year for 3 million training opportunities, with continuing professional development included. If your company is registered with HRD Corp and pays the levy, AI training for your staff can be paid from that levy rather than your cash flow, provided the course is HRD Corp-claimable.
Training is also where I would start. Buying a tool takes an afternoon. Whether it gets used depends on whether the person doing the work knows what to hand over to it and what to check afterwards. I should declare an interest. OpenMinds, the agency I co-founded, runs an HRD Corp-claimable one-day workshop on building a website with an AI coding agent, which I wrote about in building a website in one day.
The lifestyle relief change is for you personally
The individual lifestyle relief now covers subscriptions to AI software and apps for your own use, or your spouse’s or child’s. The cap stays at RM2,500 and is shared with everything else already in that relief, such as reading materials. It helps the owner a little on their personal return and does nothing for the company.
How I would use Budget 2027 as an SME owner
- Pick the job first. Name the task you want AI to take off someone’s desk, and who will own the result.
- Get the build quoted line by line. Separate development, licensing and subscriptions so the software allowance can be applied to the right lines.
- Talk to your tax agent before you spend in 2027. The measures are proposals until the Finance Bill passes, and the agent can tell you how your own invoices will be treated.
- Train the people who will use it. If you are registered with HRD Corp, check that the course is claimable before paying for one out of pocket.
- Watch for the MDEC programme. If it opens and you qualify, it pays for part of a project you had already decided to do.
Most of what Budget 2027 offers a small business arrives through your tax agent and your HRD Corp account, so the work is mostly paperwork. If you would like a second opinion on what the first AI project in your business should be, start a conversation.
