Government to cut tax breaks for electric vehicle charging station operators in 2027 budget

MALAYSIA, 12 OCTOBER 2026 —

Malaysia’s Budget 2027 Slashes Tax Incentives for EV Charging Operators, Risking Slower Rollout of Green Infrastructure

Prime Minister Datuk Seri Anwar Ibrahim announced in Budget 2027 that Malaysia will extend the Green Investment Tax Allowance (GITA) for electric vehicle (EV) charging station operators until 31 December 2030, but with a sharp reduction in benefits—cutting the tax relief from 100% to just 60% and lowering the statutory income set-off cap from 100% to 70%, a move that will increase corporate tax liabilities for operators and potentially slow the expansion of Malaysia’s EV charging network.

The policy shift, detailed in Appendix 25 of the Budget 2027 tax measures, marks a reversal of the 2023 GITA revision, which had temporarily boosted incentives for charging station operators to 100% investment tax allowance over five years with full set-off against statutory income. Under the new rules, operators will now face higher tax burdens, undermining the financial viability of deploying more charging infrastructure—a critical bottleneck in Malaysia’s push toward electrified transport.

A Policy U-Turn on EV Incentives The Green Investment Tax Allowance (GITA), first introduced in 2013, was expanded in Budget 2024 to include EV charging stations, offering operators a full 100% tax deduction on qualifying investments over five years. This was a key incentive to encourage private-sector participation in building Malaysia’s EV infrastructure, which remains severely underdeveloped despite government targets.

However, Budget 2027’s proposed changes will reduce the allowance rate to 60% while capping the set-off against statutory income at 70%. For example, a charging operator with RM1 million in statutory income would previously have no corporate tax liability under GITA. Under the new rules, they would now pay tax on RM300,000 of that income—a direct financial hit that could deter investment.

The Malaysian Highway Authority (LLM) has pledged to install 50 new charging points in 2027 under Budget 2027 provisions, a modest but long-overdue step given Malaysia’s slow deployment rate of EV infrastructure. Yet, with GITA incentives weakened, industry players warn that private-sector expansion could stall, leaving Malaysia trailing regional peers like Singapore and Thailand in EV adoption.

Industry Warns of Slower Charging Network Growth Deputy Minister of Investment, Trade, and Industry Liew Chin Tong acknowledged in July 2026 that the government was actively discussing additional support for charging operators to accelerate infrastructure deployment. However, Budget 2027’s GITA cuts appear to contradict that commitment, raising concerns among Charge Point Operators (CPOs) that the financial viability of new projects will decline.

Without strong tax incentives, CPOs may delay or cancel expansions, leaving Malaysia’s EV charging network fragmented and insufficient to support growing electric vehicle adoption. The current deployment rate on Malaysian highways remains critically low, and the LLM’s 50-charging-point target for 2027—while a step forward—is insufficient to meet projected demand as EV sales rise.

Market and Sector Impact: Higher Costs, Slower Adoption The tax relief reduction under GITA will increase operational costs for CPOs, potentially leading to higher charging fees for consumers or fewer new stations being built. This could delay Malaysia’s transition to electric mobility, particularly for long-distance travel, where charging infrastructure is most lacking.

For public-listed companies in the EV and renewable energy sectors—such as Tenaga Nasional Berhad (TNB), Edra Energy, and smaller CPOs like JuicePoint or ChargeLab—the lower GITA benefits mean reduced after-tax returns on charging station investments. Analysts expect lower profitability in the sector, which may discourage new entrants and slow the overall market growth.

Outlook: Will Further Support Emerge? The government has not yet clarified whether additional incentives—such as grants, subsidies, or extended tax holidays—will compensate for the GITA cuts. Without further intervention, Malaysia’s EV charging infrastructure rollout risks falling behind, particularly as neighboring countries like Indonesia and Vietnam introduce stronger incentives to attract green investments.

For now, CPOs and industry players are monitoring Budget 2027’s implementation, with expectations that clarifications on GITA’s revised terms will be provided in the coming months. If no alternative support mechanisms are introduced, Malaysia’s EV transition could face a critical setback, with slower charging network growth and higher costs for consumers.

The last substantive development remains the official publication of Budget 2027’s tax measures in Appendix 25, which formally reduces GITA benefits for EV charging operators—a policy shift that directly impacts the financial health of Malaysia’s green energy sector.

Related: Malaysian Highway Authority (LLM) · Malaysia