Malaysia Budget 2027 proposes cutting service tax on elderly care from 8% to 6% from 1 January 2027

What changed in detail

This is a Budget proposal, not yet legislated. Malaysia’s Budget 2027, tabled on 9 October 2026, proposes moving elderly care services from Group C to a new item under Group I of the First Schedule to the Service Tax Regulations 2018.

• The service tax rate on elderly care services would fall from 8% to 6%.
• Care fees up to RM96,000 per elderly person per year would be exempt, for care centres registered under the Care Centres Act 1993 or the Private Aged Healthcare Facilities and Services Act 2018.
• The registration threshold stays at RM500,000.

The proposed effective date is 1 January 2027, subject to implementing orders.

What it means

Two things change for providers: the rate on fees above the exemption cap, and the classification under the Service Tax Regulations. The exemption is tied to registration under the two named Acts, so a care centre that is not registered under either would not qualify and should check its status before the start date.

Budget proposals can change before they become orders. Review rate and exemption configuration ahead of 1 January 2027, but wait for the implementing orders before treating the exemption terms as final.