The 2025 fiscal outlook report estimates that the anticipated RM62 billion in petroleum income will only make up 3% of the gross domestic product (GDP) next year, with dividends from Petronas contributing over half of this total.

The decline comes amid expectations of lower crude oil prices and a decrease in petroleum income tax (Pita) collection, which is estimated at RM20.7 billion.

This marks a stark contrast to 2009, when petroleum accounted for 41.3% of total federal revenue.

In contrast, non-petroleum revenue has shown consistent growth since 2009 and is projected to rise by 7.2% to RM277.7 billion next year, reflecting improved revenue diversification.

Direct tax collections are expected to grow by 6.6%, reaching RM188.8 billion.

Corporate income tax (Cita) is anticipated to be the largest contributor at RM106.5 billion, while individual taxes are projected to contribute RM44 billion.

The growth in Cita is largely due to the implementation of e-invoicing and overall economic improvement, while the rise in individual taxes is driven by job market stability and salary increases for civil servants.

Indirect taxes are set to improve by 9.8% to RM70.2 billion, with sales and service tax (SST) contributing the highest share of RM46.7 billion, or 66.5%, and excise duties projected to increase to RM13.8 billion.

Non-tax revenue is expected to drop slightly by 0.4% to RM80.7 billion, mostly because of lower investment income.

However, annual dividends from Petronas (RM32 billion), Bank Negara Malaysia (RM4 billion), and Khazanah Nasional Bhd (RM2 billion) will still form a substantial part of the government’s revenue.

Proceeds from licences and permits, such as levies on foreign workers and motor vehicle licences, are expected to increase slightly.

Overall, the government’s total revenue is forecast to rise by 5.5% to RM339.7 billion, driven by favourable economic prospects and reforms aimed at enhancing tax collection.