AI Gets A Tax Break: SMEs Applaud 50% Deduction For Training

Image Source: LinkedIn

SME Leaders Across Malaysia Have Welcomed The Government’s 50% Tax Deduction On Artificial Intelligence (AI) And Cybersecurity Training. Announced Under Budget 2026, The Move Aims To Accelerate Digital Transformation, Boost Productivity, And Strengthen The Competitiveness Of Micro, Small, And Medium Enterprises In A Rapidly Evolving Economy.

AI upskilling gets a fiscal boost

In a landmark move to future-proof the workforce, the Malaysian government has introduced a 50% additional tax deduction for small and medium enterprises (SMEs) investing in AI and cybersecurity training. The initiative, part of Budget 2026, is designed to help SMEs embrace digital transformation and remain competitive in the global market.

The Malaysian Employers Federation (MEF) and other industry bodies have hailed the measure as a strategic step toward building a digitally skilled workforce. With AI becoming increasingly central to business operations, the tax incentive is expected to encourage more SMEs to invest in upskilling their employees.

Empowering the backbone of the economy

SMEs account for nearly 97% of all businesses in Malaysia and contribute significantly to employment and GDP. However, many face challenges in adopting advanced technologies due to limited resources. The tax cut is seen as a timely intervention to bridge this gap and empower smaller firms to innovate.

Key highlights:
- 50% tax deduction announced for AI and cybersecurity training under Budget 2026
- Initiative targets micro, small, and medium enterprises (MSMEs)
- Aims to accelerate digital adoption and workforce upskilling
- MEF calls it a “forward-looking and strategic” policy move
- Expected to enhance productivity, resilience, and global competitiveness

A step toward inclusive digital transformation

Prime Minister Datuk Seri Anwar Ibrahim emphasized that digital capabilities are no longer optional but essential for survival in today’s economy. The government’s broader SME support package also includes export grants, targeted financing, and regulatory simplification to help businesses scale globally.

Industry leaders are urging SMEs to take full advantage of the incentive by enrolling employees in certified AI and cybersecurity programs. The move is expected to create a ripple effect across sectors, boosting innovation and job creation.

Sources: The Star, Business Today, LinkedIn