Ahead of Budget 2027, World Bank tells Putrajaya to raise revenue without raising rates

Malaysia requires tax reform to address the declining tax revenue-to-GDP ratio, which has decreased from 15% to 12.7% over 15 years, according to World Bank lead economist Apurva Sanghi.

Despite containing the fiscal deficit, federal government debt has risen to 65.2% of GDP, and debt servicing costs are increasing.

Sanghi suggests that tax revenue can be increased without raising tax rates by simplifying the corporate tax system for SMEs and encouraging firms to outgrow their SME status.

He also advocates for a tax system that supports investment by allowing full coverage of qualifying investment costs.

KUALA LUMPUR, Oct 6 — Malaysia needs tax reform to address a structural decline in its tax revenue-to-gross domestic product (GDP) ratio, which has fallen to 12.7 per cent from 15 per cent 15 years ago, according to the World Bank lead economist Apurva Sanghi.

He said the federal government debt has risen to over 65 per cent of GDP although the fiscal deficit has been contained, however, this would not be enough to bring the debt-to-GDP ratio down to the target of 60 per cent by 2028.

“Federal government debt rose despite the contained deficit and now stands at 65.2 per cent.

“The cost of servicing debt is also increasing, with 17 sen of every ringgit in revenue raised spent on debt servicing,” he told the media during a briefing on October 2026 East Asia and Pacific Economic Update here today.

Yesterday, the Auditor General’s Report 2/2026 reported that federal government debt stood at RM1.32 trillion in 2025 compared with RM1.24 trillion in 2024, while the statutory debt stood at RM1.295 trillion, comprising Malaysian Government Securities, Malaysian Government Investment Issues and Malaysian Islamic Treasury Bills.

Apurva said that while increasing tax rates would be difficult, there were ways to raise tax revenue without doing so.

Responding to a question on taxation and Budget 2027, which will be tabled this Friday, he said simplifying the corporate tax system for small and medium enterprises (SMEs) by consolidating the tax structure would benefit businesses.

“Apart from that, when an SME grows and becomes a non-SME, its favourable tax rate is suddenly taken away. We call this a tax curve, and it reduces the incentive for SMEs to officially grow bigger. As we know, about 98 per cent of Malaysian companies are SMEs. Changing the incentive structure to encourage firms to graduate from SME status can help,” he added.

He also said that it would be good to see the budget make the tax system more supportive of investment.

“To be precise, consider allowing qualifying investments to fully cover 100 per cent of the investment cost,” he said. — Bernama

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世界银行首席经济学家阿普尔瓦·桑吉表示，马来西亚需要进行税制改革，以解决税收收入占GDP比率不断下降的问题。该比率在15年内从15%下降到12.7%。

尽管财政赤字得到了控制，但联邦政府债务已升至GDP的65.2%，而且偿债成本还在不断增加。

桑吉建议，可以通过简化中小企业的企业税收制度并鼓励企业超越中小企业的地位，在不提高税率的情况下增加税收收入。

他还提倡建立一种支持投资的税收制度，允许全额报销符合条件的投资成本。

吉隆坡，10 月 6 日——世界银行首席经济学家阿普尔瓦·桑吉表示，马来西亚需要进行税制改革，以解决其税收收入占国内生产总值 (GDP) 比率的结构性下降问题。该比率已从 15 年前的 15% 下降到 12.7%。

他表示，尽管财政赤字已得到控制，但联邦政府债务已升至GDP的65%以上，然而，这不足以使债务占GDP的比率在2028年降至60%的目标。

“尽管赤字得到控制，联邦政府债务仍然上升，目前已达到65.2%。

“偿债成本也在增加，每增加一令吉的收入，就有 17 仙用于偿债，”他今天在 2026 年 10 月东亚及太平洋经济展望简报会上告诉媒体。

昨天，审计长发布的第 2/2026 号报告显示，2025 年联邦政府债务为 1.32 万亿令吉，而 2024 年为 1.24 万亿令吉；法定债务为 1.295 万亿令吉，包括马来西亚政府债券、马来西亚政府投资债券和马来西亚伊斯兰国库券。

阿普尔瓦表示，虽然提高税率会很困难，但也有办法在不提高税率的情况下增加税收收入。

在回答有关税收和将于本周五提交的 2027 年预算案的问题时，他表示，通过整合税收结构来简化中小企业的企业税收制度将有利于企业。

“除此之外，当中小企业发展壮大并不再属于中小企业范畴时，其优惠税率就会突然消失。我们称之为税收曲线，它降低了中小企业合法扩张的动力。众所周知，马来西亚约98%的企业都是中小企业。改变激励机制，鼓励企业从中小企业转型升级，或许会有所帮助。”他补充道。

他还表示，希望预算案能让税收制度更有利于投资。

“确切地说，可以考虑允许符合条件的投资完全覆盖100%的投资成本，”他说道。——马新社

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