As Malaysia prepares to table Budget 2026, corporate leaders are watching how fiscal consolidation will be balanced with tax reforms, ESG compliance, and global competitiveness. PwC’s Taariq Murad shares insights on shaping corporate behaviour through strategic tax policy.
00:00Hello, you're watching Niaga Awani with me Nina Rosman and as Malaysia prepares to table budget 2026,
00:05all eyes are on how the government will balance fiscal consolidation of economic competitiveness.
00:11Corporate Malaysia is under pressure, navigating tight compliance, ESG reporting, digitalisations and global tax reforms
00:19like the OECD's pillar to at the same time the government is expected to broaden the tax base without stifling growth.
00:27Budget 2026 won't just be about numbers. It will signal the government's priorities on how tax policy can shape corporate behaviour,
00:35drive innovation and position Malaysia as a competitive hub in ASEAN.
00:39Joining us is Tariq Murad, Tax Partner at PwC Malaysia.
00:44Tariq, thank you so much for joining me. Firstly, Budget 2026 will signal the government's fiscal priorities.
00:51From a corporate tax perspective, what do you see as the most significant shift compared to previous years?
00:58Good morning, Nina. Firstly, thank you so much for inviting me to this segment.
01:03Actually, in the last few years, we have seen several new and expanded measures being introduced by the government
01:13to support the government's fiscal needs. And you may recall, these measures include the plan to implement the global minimum tax for multinationals,
01:25the plan for carbon tax to be introduced for selected industries, which is expected to be in place in 2026.
01:33Foreign source income was also being brought to tax, and the introduction of capital gains tax on unlisted shares as well as on foreign capital gains.
01:48Now, these are measures that have seen introduction in the last few years and the expectation for it to be in place in the near future.
01:57We've also seen from a tax administrative perspective, you know, a number of measures for self-assessment to be on board.
02:06For example, RPGT is already on self-assessment. Soon, stand duty will be on self-assessment.
02:14So, in my mind, Budget 2026 is a good avenue for the government to continue to focus on compliance, support, education, and enabling businesses to continue to comply with the new requirements and regulation that has been in place.
02:37Because there's quite a number of requirements that, like I mentioned, right, and with e-invoice in place, I believe, you know, the government will make the necessary refinements to not burden businesses,
02:53but to help them to get on board in terms of all these additional requirements.
02:57All right, we know that this is a support in enabling the new compliance for the new requirements.
03:02But talking about compliance, many companies are still navigating tight compliance requirements while also dealing with digitalization at the same time as you're reporting and global tax reform.
03:12In your view, how can Budget 2026 strike the right balance between broadening the tax base and ensuring ease of compliance for businesses?
03:22I think the broadening the tax base with digital guardrails and digital support, coupled with education for the public, not just for the big businesses,
03:38but also for the SME and micro SME, can help boost the compliance requirement.
03:47I think we've got to also take a step back and remember, you know, with the digital enablement of, again, I'm going to bring e-invoice as an example.
04:03You know, whilst it actually provides ease for the government to capture and broaden the tax base,
04:09from a business perspective, there are positive and support that businesses should look into.
04:16For example, with the adoption of e-invoices, the businesses can ensure that the reconciliation of their revenue, monitoring of expenses are in place.
04:31And it is also a mechanism for self-policing for the businesses.
04:36So the government can just focus on looking at the grey economy, you know, focusing on education, focusing on ease of compliance for the businesses.
04:51Those three important aspects are very important, as you mentioned, education, grey economy and ease of doing business.
04:57And talking about this business, how can tax be measured or be designed to influence corporate behaviour versus just offering short-term relief?
05:07I think the design of tax incentives or the tax measures, for example, should be, you know, shifted towards reward outcome and not just on cost.
05:23You know, linking the tax support to investment, to productivity, export, talent development in high growth and high value sector so that, you know, businesses can focus on create quality jobs,
05:38move up the value chain to benefit more and more opportunity for greater development of businesses.
05:47Encourage digital adoption, the use of AI and, you know, green transitions with targeted allowances and special reduction for businesses to adopt this technology, adopt green efficiency and sustainable supply chain.
06:04And then also make the incentive time-bound and performance-linked so that, you know, behaviours of businesses can be shifted and directed towards the intended outcome of the government.
06:20Intended outcome of the government and talking about, given your involvement with the public sector, how do you view the government's approach towards public sector-linked companies?
06:28Does it encourage greater efficiency or is there still reliance on fiscal support?
06:32I think the approach that we've seen so far is moving towards efficiency on its impact.
06:42I think the governance as well as strengthening transparency as well as performance, I think through the GEAR UP program, the GLICs are mobilizing capital on, you know, high growth sectors as well as
07:01advancing wage reforms and then setting examples for businesses on the private sectors to also, you know, get on board, right?
07:11So I think it is a good step that, you know, rather than, you know, reliance on fiscal support, you know, government-linked companies can also be the champion in terms of advancing, you know, greater reforms and governance.
07:29Potentially, I think the adoption of, you know, tax corporate governance framework by government-linked company is highly encouraged.
07:40And then, you know, this can also give a cascading impact to other businesses that work and collaborate with government-linked companies.
07:51Tariq, before we end, how would you sum up the corporate tax wishlist for the upcoming budget?
07:58I think, in my mind, in terms of the wishlist for Budget 2026 is, you know, perhaps a bold, you know, a bold positioning that the country can take in terms of, you know, setting its roadmap to re-look at the statutory corporate tax rate to be more competitive.
08:25Whilst, you know, we don't expect an immediate jerk in terms of, you know, the setting of the tax rate, but I think, you know, perhaps setting a roadmap on how the corporate tax rate can be set at a more competitive rate.
08:42The other perspective is that, you know, I would also hope that, you know, the government can use Budget 2026 to streamline and make easy the compliance requirement for businesses.
08:58And as well as targeted support on the adoption of green technology, you know, on AI and digital adoption for businesses.
09:08As you mentioned, wishlist for tax, bold, a stronger roadmap and streamline all the compliance requirements.
09:15And we also hope the best for the upcoming budget 2026.
09:18And I want to say thank you very much to our guest, Tariq Murad, Tax Partner PwC Malaysia, for helping us understand what is to be expected for the corporate tax announcement on D-Day.
09:27And stay tuned with us as we'll bring more updates on Belajar One 2026.
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