Free AI, tax breaks and business grants in Budget 2027 — how Malaysians stand to benefit

The existing AI Untuk Rakyat programme offers 100,000 Malaysians aged 18 to 30 three months’ free access to selected AI apps once they pass six learning modules on the Rakyat Digital portal. Current providers are YTL AI Labs, Alibaba and Google. — Pexels pic

By Soo Wern Jun

First Published: Friday, 06 Nov 2026 7:00 AM MYT

KUALA LUMPUR, Nov 6 — Malaysians who pay for ChatGPT or other AI apps will be able to claim the cost as tax relief under Budget 2027, one of several measures proposed to get more people and businesses using artificial intelligence (AI).

The budget also adds 100,000 free AI subscriptions for young people and sets aside RM30 million to help small businesses adopt the technology, alongside longer-term spending on skills, research and a sovereign AI cloud, as part of the government’s goal of making Malaysia an AI nation by 2030.

Who gets the additional 100,000 free AI subscriptions?

The existing AI Untuk Rakyat programme offers 100,000 Malaysians aged 18 to 30 three months’ free access to selected AI apps once they pass six learning modules on the Rakyat Digital portal.

Current providers are YTL AI Labs, Alibaba and Google.

Budget 2027 adds another 100,000 places and brings in more apps, including ChatGPT.

Prime Minister Datuk Seri Anwar Ibrahim said the expansion followed a strong response to the first round.

What support is available for businesses adopting AI?

The government has allocated RM30 million through the Malaysia Digital Economy Corporation (MDEC) to help 4,000 micro, small and medium enterprises (MSMEs) adopt AI and automate their operations.

MDEC is a government agency responsible for driving Malaysia’s digital economy.

Its work includes helping businesses adopt digital technologies, supporting digital start-ups and attracting investments into the country’s digital sector.

For smaller businesses, adopting AI can involve more than subscribing to a chatbot, while financial support could help businesses that lack the resources to implement these systems independently.

The programme will also train and certify 5,000 AI professionals, helping to develop the workforce needed to support wider adoption.

However, the RM30 million allocation should not be interpreted as a fixed grant for every business.

The amount available to individual applicants, qualifying expenses and application requirements will depend on the programme’s implementation details.

Businesses interested in participating should look out for further announcements from MDEC.

Can you claim tax relief for ChatGPT and other AI subscriptions?

Yes, Budget 2027 proposes expanding individual lifestyle tax relief to include subscriptions to AI software and applications.

As specified under the Finance Ministry’s tax measures, the relief will cover subscriptions for personal use, as well as those purchased for a spouse or child.

This means taxpayers who pay for eligible AI services, including subscription-based applications, could claim the expenses when filing their income tax returns.

However, this is not a separate tax relief ceiling for AI subscriptions.

The proposed expansion means taxpayers will be able to include eligible AI subscription fees alongside other qualifying expenses, subject to the overall RM2,500 ceiling.

This expansion is proposed to take effect from the 2027 year of assessment, meaning it will apply to eligible expenses incurred in 2027 when taxpayers file their returns in 2028.

The measure is intended to encourage digital literacy and wider adoption of AI technology by making subscription costs more affordable.

Budget 2027 proposes expanding the existing RM2,500 individual lifestyle tax relief to cover eligible AI software and application subscriptions from the 2027 year of assessment. — AFP pic

How much is being spent on AI skills and research?

The government is allocating almost RM15 million to AI Malaysia Berhad to strengthen a safe and ethical AI ecosystem, with a target of developing 200,000 AI-skilled workers.

AI Malaysia Berhad is Malaysia’s national lead agency for AI, established under the Digital Ministry to coordinate the country’s AI development and implementation.

The initiative reflects the need to equip Malaysians with skills relevant to industries increasingly using AI.

These capabilities could include understanding how AI systems work, applying them to business operations and developing technology responsibly.

Separately, RM6 billion will be allocated across ministries for research, development and commercialisation of innovations.

This is a broader allocation rather than funding exclusively for AI, intended to support research and technological development that contribute to Malaysia’s wider innovation ecosystem.

Safeguards for data

Under Budget 2027, the government is planning a sovereign AI cloud to ensure the public’s data and the country’s strategic information remain under Malaysian control.

AI systems rely on computing infrastructure to process information, run applications and, in some cases, train models.

Cloud services allow organisations to access this computing capacity remotely rather than maintaining all the necessary equipment themselves.

A sovereign AI cloud aims to give Malaysia greater control over the infrastructure and data used in these operations.

This is particularly relevant when government agencies and businesses handle sensitive information, including personal records and confidential commercial data.

Protection will also depend on access controls, cybersecurity measures and rules governing how information can be used.

According to Communications Minister Datuk Seri Fahmi Fadzil, the initiative would be managed by the Malaysian Communications and Multimedia Commission (MCMC) and the Communications Ministry.