Budget 2027 Extends Green Tax Incentives to 2030. Not Every Activity Made the Cut.

    15 October 2026 · Ecotabi Team

    The headline from Budget 2027, tabled on 9 October 2026, was that Malaysia's green technology tax incentives would run to 31 December 2030, instead of closing at the end of 2026. Reports say companies can claim an investment tax allowance of up to 100%.

    If you run a small business, you may have two reactions. The first is "I'm not building a solar farm, so this isn't for me." The second is "it's been extended, so nothing changes."

    Both are worth a second look. EY's summary of the Budget shows the detail behind the headline has changed.

    What's changed

    EY describes the Green Investment Tax Allowance (GITA) as extended, but with a narrower focus. PwC presents the package as an enhancement, with wider coverage and longer-term certainty. Both can be true: some activities are added and some are dropped.

    According to EY:

    • Project-based GITA (for businesses carrying out green projects, handled by MIDA) goes from three tiers to two. The 100% allowance stays only for the top tier: green hydrogen, and a new activity, ocean thermal energy conversion. Solar and integrated waste management projects no longer qualify.
    • GITA for assets you buy for your own use (handled by the Malaysian Green Technology and Climate Change Corporation, MGTC) keeps its overall structure, but qualifying assets will be a list approved by the Finance Minister, under two tiers. Green building and energy efficiency will no longer be eligible. A new top-tier category covers renewable energy systems (biomass, biogas, mini hydro, solar, geothermal, wind) and battery or other energy storage.
    • The Green Income Tax Exemption (GITE) for solar leasing isn't extended. Applications continue to be accepted only until 31 December 2026.

    Baker Tilly's summary gives the dates: the new period runs from 1 January 2027 to 31 December 2030, and own-use assets must be on a list approved by the Finance Minister and verified by MGTC.

    How the own-use scheme works today

    If you're an SME buying equipment for your own use, this is the route that matters. Under MGTC's current GITA Asset guideline (April 2025):

    • The scheme is for companies incorporated under the Companies Act 2016 and resident in Malaysia, so check your business structure.
    • The asset must be new, owned by the company, used in its own business (not to earn income), approved by the Finance Ministry and listed on MGTC's MyHIJAU Directory. Check the list before you buy.
    • Qualifying spending must be incurred between 1 January 2024 and 31 December 2026.
    • You apply to MGTC after the asset is installed and running, within 24 months of the supplier's invoice. Claim from LHDN only after MGTC issues its validation letter.
    • The allowance is 100% for top-tier assets such as electric vehicles, EV charging, battery storage and green buildings, and 60% for others, including solar and energy-efficient equipment. It can offset up to 70% of statutory income in a year, with unused amounts carried forward.

    That makes 31 December 2026 a date worth knowing if you're planning green building or energy-efficiency purchases, the two categories EY says won't be eligible under the revised framework.

    Before you act

    Budget measures take effect through legislation and agency guidelines, so check MGTC's and MIDA's official guidance for the new period once it's issued, and confirm the timing for any planned purchase with them and your tax adviser.

    A tax allowance reduces tax. It doesn't make a poor investment a good one. This article is general information, not tax advice. Please speak to your tax adviser before acting.

    Sources: EY, Take 5: Malaysia Budget 2027 (9 October 2026); Baker Tilly, Budget 2027 Highlights; PwC Malaysia, Tax in Motion: Budget 2027 Edition (9 October 2026); The Edge Malaysia, Highlights of Budget 2027 (9 October 2026); Free Malaysia Today, "Green technology tax incentives extended until December 2030" (9 October 2026); MGTC, Guidelines on GITA Asset (April 2025); MIDA, GITA Project for Own Consumption merged with GITA Asset.