SHAH ALAM, Oct 9 — The government will raise the minimum wage from RM1,700 to RM2,000, effective June next year, Prime Minister Datuk Seri Anwar Ibrahim announced today.
He said micro, small and medium enterprises (MSMEs) with annual sales of less than RM50 million are exempt from the move, to allow them time to adjust their business models.
“This means more than four million workers will be covered by the new minimum wage,” he said when tabling Budget 2027 in Parliament today.
Acknowledging that wages for skilled workers remain disproportionate to their qualifications, Anwar said the government would also introduce a minimum monthly wage of RM2,500 for semi-skilled workers and graduates as a starting point.
He added that the government welcomes government-linked investment companies (GLICs) and government-linked companies’ (GLCs) commitment to raise their living wage benchmark from RM3,100 to RM3,400 a month, to the benefit of 230,000 workers.
“GLICs and GLCs have also set an example. In fact, several major employers in the banking and oil and gas sectors have set more reasonable wages,” he said, urging private sector employers to follow suit.
To curb the hiring of undocumented foreigners, Anwar explained that companies other than MSMEs would only be eligible for tax deductions on salary expenses if payments are made through bank accounts in accordance with the Employment Act 1955. The requirement would not apply to deductions for other expenses.
“The government has heard the concerns of the M40 group, which have remained patient and resilient despite also being burdened by the rising cost of living,” he said.
To this end, Anwar said individual tax relief, unchanged since 2010, would be increased from RM9,000 to RM12,000, while individual income tax rates for resident taxpayers would be reduced by one percentage point.
He added that the tax rate for chargeable incomes between RM70,000 and RM100,000 would be lowered to 18 per cent, while the rate for incomes between RM100,000 and RM150,000 would be reduced to 24 per cent.
The relief would also be expanded to cover postnatal care, care expenses for parents and grandparents, sports shoes, children’s tuition fees, pet vaccination costs, pet adoption from registered shelters, and lifestyle tax relief, which would include subscriptions to AI services.
Meanwhile, Anwar said the tax rate for high-income earners with chargeable income exceeding RM1 million would be adjusted to 30 per cent.
“This means the increase in tax relief and reduction in individual income tax rates will provide additional disposable income of up to RM1,600 to about five million taxpayers,” he explained.
