The government will continue to provide full excise duty and sales tax exemptions on new Proton and Perodua cars purchased by taxi and private-hire car operators under Budget 2027.

The measure was initially announced by Prime Minister Datuk Seri Anwar Ibrahim during the presentation of Budget 2026 and has been retained in the latest budget. It applies to purchases of new national cars by taxi and private-hire vehicle operators. The tax exemption reduces the purchase costs of eligible vehicles for commercial passenger transport operators. It applies to new Proton and Perodua vehicles purchased for these purposes.

In addition to the tax exemptions, HRD Corp (Human Resource Development Corporation) has allocated MYR 10 million (US$ 2.4 million) to cover course fees and allowances for licensed taxi drivers undertaking capacity-building training. The training covers operational efficiency and safety. HRD Corp, formerly known as the Human Resources Development Fund (HRDF), is a statutory body under Malaysia's Ministry of Human Resources.

The tax exemption is separate from the Teksi Madani programme, launched by Anwar in July 2026. The programme introduced the Proton S70 as a taxi, with an on-the-road price of approximately MYR 64,500, excluding insurance. The vehicle is eligible for excise duty and sales tax exemptions.

Under the Teksi Madani programme, the government also announced a MYR 10 million matching grant for existing taxi owners replacing older vehicles. Under the scheme, Proton provides financial assistance of up to MYR 2,000 per eligible vehicle, matched by a government contribution of up to MYR 2,000. The combined assistance amounts to MYR 4,000 per vehicle.

The measures address vehicle acquisition costs and training expenses in the commercial passenger transport sector. Their effects on operating costs, passenger fares and charges for e-hailing services have not been established.

Malaysia's headline inflation rate was 1.9% in August 2026, while real gross domestic product (GDP) growth was reported at 6.0% and the unemployment rate at 2.9%.

The tax exemptions apply to eligible purchases of vehicles manufactured by Proton and Perodua. The measures therefore provide tax relief for operators purchasing vehicles from these two national brands and may influence demand for their vehicles and locally manufactured automotive components.

The tax exemptions operate alongside other measures affecting vehicle operating costs, including the BUDI95 fuel subsidy scheme for eligible recipients. Under the prevailing tiered fuel-pricing structure, the unsubsidised price of RON95 was reported at MYR 4.7 per litre.

Although the tax exemptions have been confirmed for the coming fiscal year, their longer-term effects on the used-vehicle market for retired taxis remain unclear. The number of drivers who have received the matching grant under the Teksi Madani programme has not been disclosed. Specific targets for the total number of vehicle replacements under the latest budget allocation have also not been announced.