Executive Summary
Malaysia is moving towards implementing a carbon tax as part of its commitment to achieving its climate change goals. This guide provides an overview of what businesses need to know about the upcoming carbon tax, including its potential impact and how to prepare.
What is a Carbon Tax?
A carbon tax is a tax levied on the carbon content of fuels. It is a market-based instrument that aims to reduce greenhouse gas emissions by making it more expensive to emit carbon dioxide and other greenhouse gases.
Malaysia's Proposed Carbon Tax
While the details of Malaysia's carbon tax are still being finalized, it is expected to be implemented in 2026. The tax will likely be applied to a wide range of sectors, including energy, manufacturing, and transportation. The revenue generated from the carbon tax could be used to fund climate change mitigation and adaptation measures.
Potential Impact on Businesses
The carbon tax will have a direct impact on businesses that are significant emitters of greenhouse gases. These businesses will face higher operating costs, which may need to be passed on to consumers. However, the carbon tax will also create new opportunities for businesses that can provide low-carbon goods and services.
How to Prepare Your Business
There are a number of steps that businesses can take to prepare for the carbon tax:
- Measure Your Carbon Footprint: The first step is to understand your company's carbon footprint. This will help you to identify your key emission sources and to prioritize your emission reduction efforts.
- Develop a Decarbonization Strategy: Develop a strategy for reducing your company's greenhouse gas emissions. This may include investing in energy efficiency, renewable energy, and other low-carbon technologies.
- Engage with Your Stakeholders: Communicate your company's climate change strategy to your stakeholders, including your employees, customers, and investors.
Related Services
Our Tax Advisory & Compliance team can help you to understand the potential impact of the carbon tax on your business. Our Corporate Finance Advisory team can also help you to identify and finance low-carbon investment opportunities.
Last updated: 15 Oct 2025