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Tax Incentives

Malaysia offers a wide range of tax incentives ranging from tax exemptions, allowances to enhanced tax deductions. Generally tax incentives are available for tax resident companies.

Pioneer Status (PS) is an incentive in the form of tax exemption which is granted to companies participating in promoted activities or producing promoted products for a period of 5 or 10 years.

The alternative to pioneer status incentive is usually the investment tax allowance (ITA). ITA is an incentive granted based on the capital expenditure incurred on industrial buildings, plant and machinery used for the purpose of the promoted activities or the production of the promoted products. This incentive is generally given for a period of 5 or 10 years.

PS and ITA are mutually exclusive. Where income is exempted under the PS incentive, tax exempt dividends may be paid out of the exempted income. Unutilised ITA can be carried forward until fully utilised. However unutilised PS losses can only be carried forward for a maximum period of 7 consecutive YAs after the end of the pioneer period. For unutilised PS losses accumulated as at YA 2018, where the incentive has already expired, these losses can be carried forward for another 7 YAs until YA 2025.

Malaysia has undertaken a review of its tax incentives and excluded royalties and intellectual property income from its tax incentives in line with the requirements of BEPS Action 5 (Counter Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance).

The government is also undertaking a comprehensive study of the existing tax incentive structure to provide a competitive, transparent and more attractive tax incentive framework. To provide space for the study to be completed, it is proposed that incentives including aerospace, building and repair of ships, BioNexus and Economic Corridors which expire in 2020 to be extended to 2022.

An Approved Incentive Scheme is proposed for high technology activity in the manufacturing and services sectors and other activities which benefit the Malaysian economy. Under the scheme, a concessionary tax rate of not more than 20% is to be prescribed by the Minister of Finance. 

In the following pages, we provide a summary of the main tax incentives for the relevant industry sectors.

 

Agriculture

Incentives

Years


Main incentives

Company producing promoted products or engaged in promoted activities

PS with tax exemption of 70% on statutory income (SI); or

5

ITA of 60% on qualifying capital expenditure (QCE) set-off against 70% of SI

5


Allowance for increased exports (AIE)

For prescribed agricultural produce

Allowance equal to 10% of the value of increased exports deducted against 70% of SI

 


Enhanced AIE

Company attaining / receiving*:

Rates of allowance, deductible up to 70% of SI:

 
  • Significant increase in export of at least 50%

30% of the value of increased exports

 
  • Penetration of new markets

50% of the value of increased exports

 
  • *Export Excellence Award

100% of the value of increased exports

 

Reinvestment

Company undertaking qualifying project in expansion, modernisation or diversification of its cultivation and farming business excluding the business of rearing chicken and ducks

RA of 60% of QCE set-off against 70% of SI; or

15

RA of 60% on QCE set-off against 100% of SI where qualifying project has achieved the level of productivity as prescribed by the Minister

15

Company in resource-based industries

PS with tax exemption of 70% of SI; or

5

ITA of 60% on QCE set-off against 70% of SI

5

Special reinvestment allowance (RA)

A special RA granted for YA 2020 to YA 2022 (extended to YA 2024) for selected agriculture projects which have exhausted their existing RA period and special RA granted for YA 2016 to YA 2018

Angel investor, Equity Crowdfunding and Venture capital

Angel investor

Resident individual who invests in investee company (Application received by 31.12.2023)

Tax exemption of aggregate income in the second YA following the investment for a sum equal to the amount invested in the investee company (subject to conditions)

 

Equity crowdfunding

Individual who invests in equity crowdfunding from 1.1.2021 to 31.12.2023 Tax exemption of aggregate income for a sum equal to 50% of the amount invested (subject to conditions).

 

Venture capital (VC)

(Qualifying investment period is until 31 December 2026, for application received by 31.12.2023)

  • Venture capital company (VCC)

Tax exemption on SI from all sources, other than interest income from savings or fixed deposits and profits from Syariah-based deposits 

5

  • Venture capital management company (VCMC)

Tax exemption on share of profits, performance & management fees from investment made by VCC 

-

  • Resident investing in VCC fund

Single deduction equivalent to the amount of investment made in VCC, limited to RM20 million a year

-

  • Resident investing in VC

Single deduction equivalent to the amount of investment in VC

-

Automotive

Incentives

 

Years

New manufacturing projects, and expansion and / or diversification projects for:

  • Assembly of Energy Efficient Vehicles (EEV)
  • Assembly of Next Generation Vehicle (NxGV)
  • Critical components / systems for EEV and non-EEV
  • Components for hybrid and electric vehicles
  • Components for NxGV

PS with 70% / 100% exemption on SI; or 

ITA of 60% / 100% on QCE set-off against SI

5/10

5/10

 

Biotechnology

Incentives

Years

BioNexus status company:

  • New business / expansion* of qualifying activity

Income tax exemption of 100% of SI; or

10/5*

ITA of 100% on QCE set-off against 100% of SI

5

Industrial building allowance of 10%

10

  • Upon expiry of the tax exempt period

Concessionary tax rate of 20% of SI

10

Company or individual investor investing in BioNexus company

Single deduction equivalent to the value of investment in seed capital and early stage financing

-

 

Cold Chain Facilities

Incentives

Years

New companies (providing cold room facilities for prescribed perishable agriculture produce)

PS with tax exemption of 70% of SI; or

5

ITA of 60% on QCE set-off against 70% of SI

5

Existing companies (reinvesting in cold room facilities for prescribed perishable agriculture produce)

PS with tax exemption of 70% of increased SI; or

5

ITA of 60% on additional QCE set-off against 70% of SI

5

 

Digital Ecosystem Acceleration Scheme (DESAC)

Incentives

 

Years
Application received from 30.10.2021 to 31.12.2025  

Digital Technology Provider

New company

 

Income tax rate of 0% to 10%

 

10

Existing company with new services segment

Income tax rate of 10%

10

Digital Infrastructure Provider


ITA of 100% on QCE for qualifying activities set-off against 100% SI 

10

Economic Corridors

Incentives

Years

Iskandar Malaysia

The following are three tier package incentives for approved companies in Medini:

  • Approved developer

Income tax exemption in respect of income derived from rental or disposal of a building located in an approved area until YA 2025

-

  • Approved development manager

Income tax exemption in respect of income derived from the provision of management, supervisory or marketing services to approved developers until YA 2022

-

  • IDR status company

Income tax exemption in respect of income derived from qualifying activities

10

Non-resident

Withholding tax exemption on royalty and technical fee received from IDR status company 
* first 10 years from the date of commencement of qualifying activity of the IDR status company

10*

Knowledge workers working in Iskandar Malaysia

Income tax at 15% on chargeable income from employment which commences on or before 31.12.2022 with a designated company engaged in qualified activities

-

Global Business Services (GBS) in Iskandar Puteri

Customised incentives and export facilitation for qualified companies with GBS operations

-


Northern Corridor Economic Region(NCER)
Investments in priority sectors of NCER may qualify for the following broad-based incentives as well as customised incentives:

  1. Income tax exemption of up to 100% for a period up to 15 years
  2. Investment Tax Allowance of up to 100% on qualifying capital allowance for a period up to 10 years
  3. Import duty exemption on raw materials, components, machinery, spare parts and equipment
  4. Stamp duty reduction of 50% on instruments of transfer or lease of land (Kedah & Perlis)

 

East Coast Economic Region (ECER)
Qualifying person undertaking qualifying activity

Income tax exemption of SI; or

10

Income tax exemption equivalent to 100% of QCE (Application received by 31.12.2022)

5

Stamp duty exemption on instruments of transfer of real property or lease of land or building used for the purpose of carrying on a qualifying activity (executed from 13.6.2008 to 31.12.2022)

-

Qualifying person undertaking special qualifying activity  (Application received by 31.12.2022)

Income tax exemption at a rate of 70% to 100% of SI and for a period as determined by the Minister of Finance (MOF); or

-

Income tax exemption equivalent to 60% to 100% of QCE incurred and within a period as determined by the MOF

-

Non-resident

Withholding tax exemption on fees for technical advice, assistance or services, or royalty received from a qualifying person for the purpose of a qualifying activity or special qualifying activity (until 31.12.2020)

-

Approved developer undertaking development in industrial park or free zone 
(Application received by 31.12.2022)

Income tax exemption in respect of income derived from:

  • disposal of any right over any land or disposal of a building or rights over building or part of building; or

  • rental of building or part of building

10

Approved park managers 
(Application received by 31.12.2022)

Income tax exemption of SI derived from the provision of park management services in the industrial park or free zone

10

Approved development manager 
(Application received by 31.12.2022)

Income tax exemption of SI derived from the provision of management, supervisory or marketing services relating to the development of an industrial park or free zone

10

Company investing in a related company 
(Application received by 31.12.2022)

Single deduction  equivalent to the  value of investment  made into a related company carrying out qualifying activity or special qualifying activity

-

Company or individual who sponsors any hallmark event carried on in ECER from 13.06.2008 to 31.12.2022 
(Application received by 31.12.2022)

A deduction for an amount not exceeding RM1 million per YA in respect of cash contribution or contribution in kind to be offset against the business income of the sponsor

 


Sarawak Corridor of Renewable Energy (SCORE)

Investors who make strategic investments in SCORE can apply for customised special incentive packages.


Sabah Development Corridor (SDC)

(Application for SDC incentives must be received by 31.12.2022)

Kinabalu Gold Coast Enclave (KGCE)

Tourism project:

 

Income tax exemption of 100% of SI; or

10

ITA of 100% on QCE set-off against 100% of SI

5

Import duty and sales tax exemption

-

Stamp duty exemption on land acquired for development

-

Creative cluster:

 

Income tax exemption of 100% of SI; or

5

ITA of 100% on QCE set-off against 100% of SI

5

Import duty and sales tax exemption

-

Integrated-Livestock Valley (ILV) and Palm Oil Industrial Cluster (POIC) 

Downstream activities – Manufacturing:

 

Income tax exemption of 100% of SI; or

10

ITA of 100% on QCE set-off against 100% of SI

5

Sipitang Oil & Gas Industrial Park (SOGIP)

 

Downstream activities – Manufacturing (Medium & Heavy industries):

 

Income tax exemption of 100% of SI; or

10

ITA of 100% on QCE set-off against 100% of SI

5

Downstream activities (Ship building & repairs industries):

 

Income tax exemption of 100% of SI; or

5

ITA of 100% on QCE set-off against 100% of SI

5

Sandakan Education Hub (SEH) and Marine Integrated Cluster (MIC)

Income tax exemption of 100% of SI; or

10

ITA of 100% on QCE set-off against 100% of SI

5

Import duty and sales tax exemption on equipment and machineries

-

Sabah Agro-Industrial Precinct (SAIP)

Production of Halal products (projects located within the Halal hub):
ITA of 100% on QCE set-off against 100% of SI


10

Production of Halal products (projects located outside the Halal hub):
ITA of 100% on QCE set-off against 100% of SI


10

Import duty and sales tax exemption

-

Education & Training

Incentives

Years

Kindergarten

Tax exemption in respect of SI derived from the provision and maintenance of the kindergarten business

5

Non-profit oriented school / international school

Tax exemption in respect of SI derived from the management of the school

-

Private / International school

Further deduction for expenses incurred for overseas promotion (not exceeding RM100,000 per YA)

-

Private higher education institution (PHEI)

ITA of 100% on QCE set-off against 70% of SI (PHEI in the science field undertaking additional investment to upgrade equipment or expand their capacity)

10

Further deduction for promotion of export of higher education

-

Single deduction of the expenses incurred for the development and compliance of new courses claimed over 3 years

-

Import duty exemption for educational equipment

-

Non-resident franchisor

Withholding tax exemption on royalty income for providing approved franchised education or training programmes to PHEI

-

New or existing technical / vocational training institute

ITA of 100% on QCE set-off against 70% of SI

10

Export of private education

Exemption of income equal to 50% of the value of increased exports deducted against 70% of SI

-

Company providing / sponsoring scholarships

Single deduction on expenditure incurred for the provision of scholarship

-

Double deduction for consultation and training costs for the implementation of Flexible Work Arrangements (not exceeding RM500,000 per YA)

Double deduction for provision of internship programme / Structured Internship Programme (SIP) approved by Talent Corporation Malaysia Berhad (until YA 2021, extended to YA 2025)

Double deduction for training cost under the Skim Latihan 1Malaysia for unemployed graduates

Single deduction for expenditure incurred for the provision of practical training of non-employees

Single deduction for pre-commencement of business training expenses for potential employees

Double / further deduction for expenditure on approved training programmes incurred by companies which do not contribute to Human Resources Development Fund (HRDF)

Enhancing skills and talent development for Industry 4.0 
Refer to “Manufacturing - Industry4WRD”

 

Financial Services

Incentives

 
Real Estate Investment Trust (REIT) / Property Trust Fund (PTF)
  • Tax exemption on all income if at least 90% of total income is distributed and the REIT / PTF is listed on Bursa Malaysia

  • Special single deduction for consultancy, legal and valuation service fees incurred in the establishment of REIT

  • Final withholding tax on income distribution from a REIT which has been exempted from tax received by:

    • non-corporate or foreign institutional investors - 10% (until YA 2025)

    • non-resident companies - 24% 

  • Transfer of real property to REIT

    • Stamp duty exemption on instruments of transfer / deed of assignment relating to the purchase of real property and instruments of transfer of real property to REIT / PTF

    • Real property gains tax exemption on disposal of real property to a REIT / PTF

    • No balancing charge on disposal of an industrial building from a company to a REIT. The REIT is eligible to claim the balance of unclaimed industrial building allowance of the disposer if the disposer company owns 50% or more of the units in the REIT


Unit Trust

Tax exemption on interest income from any licensed bank/development financial institution except in the case of a unit trust which is a wholesale fund which is a money market fund. 

Tax exemption on gains on realisation of investments

Tax exemption on certain interest or discount – Refer to the chapter on “Income exempt from tax”


Closed-end fund company

Tax exemption on gains on realisation of investments

Tax exemption on certain interest or discount – Refer to the chapter on “Income exempt from tax”


Fund management

 

Tax exemption of SI derived from the business of providing fund management services in respect of the following funds (until YA 2023):

  1. funds managed in accordance with Syariah principles and certified by Securities Commission to the following investors:
    • local investors and foreign investors in Malaysia;
    • Business Trust and REIT in Malaysia.
  2. Sustainable and Responsible Investments (SRI) fund approved by the Securities Commission

Islamic Finance

Issuance of Sukuk and Retail Sukuk under principles of Wakalah

  • Deduction on expenses for the issuance of Sukuk.

  • Deduction on expenses and double deduction on additional expenses for the issuance of Retail Sukuk 

(until YA 2025)

Issuance cost of SRI Sukuk

Tax deduction is given on the issuance costs of SRI Sukuk approved, authorised by or lodged with the Securities Commission (until YA 2023)

Company that establishes a SPC solely for the purpose of issuance of Islamic securities

Single deduction for cost of issuance of Islamic securities incurred by a Special Purpose Company (SPC)

Global Trading Centre

Incentives

   

Years

Qualifying trading activities 

(Applications received from by 31.12.2022)

Concessionary corporate income tax rate of 10% (extendable for another 5 years)

5

Green incentives

Incentives

Years

Green technology (GT)

Company undertaking qualifying GT project / purchase of GT assets listed on MyHijau Directory

(Application received by 31.12.2023)

ITA of 100% on QCE set-off against 70% of SI 

3

Company undertaking GT services

(Application received by 31.12.2023)

Income tax exemption of 100% of SI until YA 2020 (extension of 3 years at exemption of 70% SI).

3

Company undertaking solar leasing activities

(Application received by 31.12.2023)

Income tax exemption of 70% of SI

  • Capacity of >3MW - ≤10MW
  • Capacity of >10MW - ≤30MW

 

5

10

Halal incentives

Incentives

Years

Halal food production outside halal parks:

  • New companies
  • Existing companies diversifying production or upgrading/ expanding of existing plant

ITA of 100% on QCE set-off against 100% SI

5

Halal industry players located in designated halal parks:

New companies producing prescribed halal products

100% tax exemption on QCE; or

10

Tax exemption on export sales

5

Double deduction for costs in obtaining international quality standard certification

-

Import duty exemption on raw materials used for the development and production of halal promoted products

-

Halal park operators (HALMAS status)

100% tax exemption; or

10

100% tax exemption on QCE

5

Import duty exemption on equipment, components and machinery used in cold room operations

-

Halal logistics operators

100% tax exemption; or

5

100% tax exemption on QCE

5

Import duty exemption on equipment, components and machinery used in cold room operations

-

Halal certification

Double deduction for expenses incurred in obtaining halal certification issued by an approved certification body

-

 

 

Healthcare & Wellness

Incentives

Years

Private healthcare

 

 

New facilities or expansion, modernisation or refurbishment of existing facilities

For the purpose of promoting medical tourism:
Tax exemption equivalent to 100% of QCE set-off against 100% of SI (application received by 31.12.2022)

5

Export of healthcare services to foreign clients

Allowance equal to 100% (w.e.f YA 2018 to YA 2022) of the value of increased exports deducted against 70% of SI

-

Mines Wellness City (MWC)

MWC developer (undertaking new development in MWC)
Note 1 - From the first YA the MWC developer derives SI until YA 2023
Note 2 - From the first YA the MWC developer derives SI until YA 2026

Income tax exemption of 100% of SI from:

  • disposal of any rights over any land; or disposal of building or rights over a building or part of a building located in MWC; or

Note 1

  • rental of a building or part of a building located in MWC

Note 2

Stamp duty exemption of 50% on instruments of transfer or lease of land or building in the MWC executed from 1.1.2013 to 31.12.2023

-

MWC development manager 
Note 3 - From the first YA the MWC manager derives SI until YA 2023

PS with tax exemption of 100% of SI derived from providing management, supervisory or marketing services to MWC Developer in the MWC

Note 3

MWC operator

PS with tax exemption of 70% of SI derived from qualifying activities carried out in the MWC; or

5

ITA of 60% on QCE set-off against 70% of SI for each YA. 
(application received by 31.12.2026)

5

Professional services

Export of medical and dental services

Further deduction of qualifying expenditure incurred for the purpose of the export of services /  professional services

-

 

Hotel & Tourism

Incentives

 

Years

Medium & low cost hotels up to 3 star / Holiday camps & recreational projects / Convention centre / Tourism projects

Income tax exemption of 70% of SI; or

5

ITA of 60% on QCE set-off against 70% of SI 

5

Reinvestment in hotels – companies expanding, modernising and renovating (up to 3 rounds of reinvestment)

ITA of 60% on QCE set-off against 70% of SI 

5

ITA of 100% on QCE set-off against 100% of SI (4 and 5 star hotels in Sabah & Sarawak)

5

Reinvestment in tourism projects 

(up to 2 rounds of reinvestment )

Income tax exemption of 70% of SI; or

5

ITA of 60% on QCE set-off against 70% of SI 

5

Extension and modernisation of existing hotel buildings

Refer to the chapter on “Capital Allowance”

-

Sponsoring of any approved arts, cultural or heritage activity 

Single deduction of up to RM1,000,000 [of which only RM300,000 is allowed for sponsoring foreign arts, cultural or heritage activity]

-

Hotel / Tour operators

Further deduction for approved training (refer to “Education & Training”)

-

Further deduction on overseas promotion of tourism in Malaysia

-

Tour operators

ACA (IA of 20% & AA of 40%) on expenses incurred on the purchase of new locally assembled excursion bus (w.e.f. YA 2020 to YA 2021, extended to YA 2024)

 

Excise duty exemption of 50% on the purchase of new locally assembled vehicles used as tourism vehicles (application received by 31.12.2021)

 

International theme park for tourism project (New investment)



PS with tax exemption of 100% of SI, or 

5

ITA of 100% on QCE set-off against 70% of SI

5

Promotion / organisation of conferences - companies whose main activities are not promoting / organising of conferences

Income tax exemption of 100% of SI where at least 500 foreign participants are brought in annually through conferences hosted (w.e.f. YA  2020 to YA 2025)

-

Approved arts, cultural, sports and recreational activities organiser 

Income tax exemption of 50% of SI (w.e.f. YA 2020 to YA 2022, extended to YA 2025)

-

Logistics & Shipping

Incentives

Years

Non-resident person who receives income from a Malaysian shipping company

Withholding tax exemption on income from:

  • rental of a ship on a voyage, time charter or bare boat basis; or
  • rental of International Standard Organisation containers

-

Company providing chartering services of luxury yacht

Income tax exemption of SI

5

Company undertaking or intending to expand / diversify into  integrated logistics service

Income tax exemption of 70% of SI, or

5

ITA of 60% on QCE set-off against 70% of SI

5

Manufacturing

Incentives

Years

Main incentives

Manufacturers producing promoted products or engaged in promoted activities

PS with tax exemption of 70% of SI; or

5

ITA of 60% on QCE set-off against 70% of SI

5

Enhanced incentives

Manufacturer of selected M&E and specialised M&E

PS with tax exemption of 100% of SI; or

10

ITA of 100% on QCE set-off against 100% of SI

5

High technology projects

PS with tax exemption of 100% of SI; or

5

ITA of 60% on QCE set-off against 100% of SI

5

Manufacturers of pharmaceutical products including vaccines, investing in Malaysia (Applications received by 31.12.2022)
  • Income tax rate of 0% up to 10% for first 10 years and at 10% for subsequent 10 years

  • Import duty / sales tax exemption for machineries, equipment and raw materials

10 + 10

Industrialised Building System (IBS) Components

Applications received by 31.12.2025

  • with at least 3 basic IBS components

ITA of 60% on QCE set-off against 70% of SI

5
Relocation of overseas business operations/facilities to Malaysia
Manufacturing and selected services sector (application received by 31.12.2022)
New company 0% tax rate (new investment in manufacturing sector with capital investment of RM300 million - RM500 million) 10
0% tax rate (new investment in manufacturing sector with capital investment above RM500 million) 15
0% to 10% tax rate (for relocation of services activities) up to 10
Existing company ITA of 100% on QCE set-off against 100% of SI 
(for relocation of manufacturing operation with capital investment above RM300 million)
5
10% tax rate (for relocation of services activities) up to 10
Automation capital allowance
Refer to the chapter on “Capital Allowance”
Reinvestment

Company undertaking qualifying project in expansion, modernisation, automation or diversification of existing manufacturing business

  • Similar to Reinvestment incentives under “Agriculture” sector
Special reinvestment allowance (RA)

A special RA granted for YA 2020 to YA 2022 (extended to YA 2024) for existing manufacturing companies which have exhausted their existing RA period and special RA granted for YA 2016 to YA 2018.

Transition to Industry 4.0 and 5G digital economy
Electrical and electronic companies: 
  • Investing in selected knowledge-based services

  • That have exhausted their RA incentive

Income tax exemption

ITA of 50% on QCE set-off against 50% of SI (Application received by 31.12 2021) 

10

5

Industry4WRD 

Manuracturing sector and manufacturing-related services sector

 

 

 

 

 

Single deduction of up to RM27,000 paid to the Malaysian Productivity Corporation on readiness assessment expenses of I4.0-RA (until YA 2026)

Double deduction on expenses for companies participating in an approved program under the National Dual Training Scheme approved by Ministry of Human Resources (programs implemented from 1.1.2019 to 31.12.2021)

Single deduction for PHEIs for development expenses on new technology and engineering courses verified by Ministry of Education (until YA 2021)

Single deduction on equipment and machinery contributed to Skills Development Centres, Polytechnics or Vocational Colleges certified by the Ministry of Human Resources or Education (contributions made from 1.1.2019 to 31.12.2021)

Double deduction for companies providing scholarships / bursaries to qualifying Malaysian students to pursue studies at technical and vocational, diploma and degree level in fields of engineering and technology (until YA 2021, extended to YA 2025, and expanded to all fields of study, and Masters and Doctorate level)

Double deduction on expenditure incurred in conducting internship program, approved by the Ministry of Human Resources, for undergraduate students in fields of engineering and technology (until YA 2021)

Anchor Company

Double deduction of up to RM1 million per year for 3 consecutive YAs on qualifying operating expenditure on costs of product development, upgrading capabilities of vendors and skill training of vendors incurred in implementing Industry4WRD Vendor Development Program as verified by the Ministry of International Trade and Industries (MITI) (MOU signed between company and MITI from 1.1.2019 to 31.12.2021)

 

Allowance for increased exports (AIE)

Manufacturer attaining:

Rates of allowance, deductible up to 70% of SI:

 

  • 30% of value added exports
  • 10% of the value of increased exports

-

  • 50% of value added exports
  • 15% of the value of increased exports

-

Enhanced AIE

Similar to Enhanced AIE incentives under “Agriculture” sector

Deductions

Manufacturer shipping goods from Sabah or Sarawak to any port in Peninsular Malaysia

Further deduction of freight charges incurred on the shipment of goods

-

Manufacturers

Further / double deduction on the promotional expenditure incurred in seeking opportunities or in creating or increasing demand for the exports

-

Anchor company which participates in a Vendor Development Programme Double deduction of up to RM300,000 (RM500,000*) per YA for 3 consecutive YAs on qualifying expenditure incurred by an anchor company to carry out prescribed activities. (MOU signed between company and MITI from 1.1.2014 to 31.12.2020, *for MOU signed with MEDAC from 1.1.2021 to 31.12.2025

Multimedia Super Corridor (MSC)

Incentives

Years

MSC Malaysia Status Services Incentive 

  • Category 1 (located at designated premises within cyber city / centre) and Category 2 (located within cyber city  /centre)

Tax exemption of 100% of SI (extendable for another 5 years)

5

Import duty exemption for multimedia equipment

-

  • Category 3 (not subject to location conditions)

Tax exemption of 70% of SI
(Extendable for another 5 years subject to meeting the conditions of Category 1 or 2

5

Import duty exemption for multimedia equipment

-

Others

 

 

Owner of a building in Cyberjaya Flagship Zone used for his business or rented to an approved MSC status company

Industrial building allowance at rate of 10% on the qualifying building expenditure incurred for approved MSC activities

10

National & Strategic Projects

Incentives

Years

Approved business eligible for special incentive scheme (pre-package)

Tax exemption of SI; or

up to 15

Tax exemption equivalent to amount of QCE set-off against SI
(The incentive rates and period are to be determined by the Minister of Finance [MOF])

up to 10

Approved services projects in areas of transportation, communications and utilities

Investment Allowance of 60% to 100% of QCE set-off against 70% to 100% of SI; or

5

Tax exemption of 70% to 100% of SI
(The incentive rates and period are to be determined by the MOF)

5 or 10

Industrial building allowance

-

Import duty exemption on machinery and equipment

-

Projects / products of national strategic importance

PS with tax exemption of 100% of SI
(extendable for another 5 years); or

5

ITA of 100% on QCE set-off against 100% of SI

5

 

 

Oil & Gas

Incentives

Years

Chargeable person carrying out petroleum operations in qualifying project

Investment Allowance of 60% of QCE set-off against 70% of SI in respect of a qualifying project or on an infrastructure asset as determined by the Minister

10

Qualifying person undertaking qualifying activity in Refinery & Petrochemical Integrated Development (RAPID) complex

Income tax exemption of SI (extendable for another 5 years at 50% tax exemption, subject to application and approval)

15+5

Income tax exemption equivalent to 100% of QCE (extendable for another 5 years subject to application and approval)

10+5

Single deduction for pre-commencement expenses

-

Withholding tax exemption on any payments made to non-residents (w.e.f 10.10.2011 to 31.12.2021)

-

Stamp duty exemption on all instruments executed in relation to qualifying activity (executed on or after 10.10.2011 but not later than 31.12.2021)

-

Labuan International Commodity Trading Company (LITC) which  undertakes qualifying activity under the Global Incentives for Trading programme (GIFT)

Tax exemption on income derived purely from the trading of physical and related derivatives instruments of liquefied natural gas (LNG) in any currency other than the Malaysian Ringgit

3

Taxed at 3% on chargeable profits derived from the trading of physical and related derivatives instruments of:

  1. petroleum and petroleum-related products including LNG,
  2. minerals,
  3. agriculture products,
  4. refined raw materials,
  5. chemicals and
  6. base minerals,

in any currency other than the Malaysian Ringgit

-
Investment in Late-Life Asset (LLA) projects in upstream petroleum industry (LLA Production Sharing Contracts awarded from 1.1.2020 to 31.12.2029)

Petroleum income tax rate at 25%

Accelerated capital allowance within 2 years

Carry back of losses from decommissioning activities to be utilised against income for 2 consecutive immediate preceding YAs

Exemption from export duty on petroleum products

Research & Development (R&D)

Incentives

Years

In-house R&D project

ITA of 50% on QCE set-off against 70% of SI

10

Contract R&D company

PS with tax exemption of 100% of SI or

5

ITA of 100% on QCE set-off against 70% of SI

10

R&D company

ITA of 100% on QCE set-off against 70% of SI

10

Any person making contribution / payment to approved research institute /company (conditions apply to related companies)

 

Double deduction for the following expenditure:
  • cash contribution to an approved research institute
  • payment for use of services of an approved research institute/company
  • payment for use of services of a R&D company or a contract R&D company

-

 

In-house R&D (includes IT & software) by a person resident in Malaysia

Double deduction for approved in-house R&D expenditure of which any amount incurred outside Malaysia for that year is not more than 30% of the total expenditure for that year

-

R&D undertaken by a person or on his behalf

Single deduction for R&D expenditure

-

Building used for approved research or by R&D company / contract R&D company

Industrial building allowance (initial allowance of 10% & annual allowance of 3%)

-

Qualifying company undertaking commercialisation of public* R&D findings (investee company) (*including private higher learning institutions)

Tax exemption of SI derived from the commercialisation of R&D findings (including non-resource based) (Applications received by 31.12.2025)

10

Qualifying company investing in commercialisation of public* R&D findings, (investee company) (*including private higher learning institutions)

Single deduction for value of investment made to its related company which undertakes the commercialisation of R&D findings (including non-resource based) (Applications received by 31.12.2025)

-

Approved New Technology Based Firm

Tax exemption on adjusted income consisting of the development or commercialisation of technological innovations

5

Qualifying company undertaking intellectual property development activities in Malaysia

Tax exemption on income determined using the Modified Nexus Approach, derived from patent and copyright software of qualifying activities (Application received by 31.12.2022)

10

Regional operations

Incentives

Years

Representative office /Regional office

Not subject to tax in Malaysia

-

Expatriate post based on functions and activities of the representative office / regional office

-

 

Principal Hub (PH)

Incentives

   

Years

(Application for PH incentive received by 31.12.2022)

Manufacturing / Services company that integrates the supply chain management for upstream &  downstream activities under the PH operation

New company

Reduced corporate income tax rate of 0% or 5% for Tier 1 or 2 respectively (extendable for another 5 years, applications received by 31.12.2022)

5

Existing company

10% tax of SI from qualifying activities 

5

Tun Razak Exchange (TRX)

Incentives

Years

Approved property developer undertaking development in TRX

Income tax exemption of 70% of SI from the:

  • disposal of any building or rights over any building or part of a building within TRX (until YA 2022);

  • rental of building or part of a building within TRX (until YA 2027)

5


TRX Marquee status company

Stamp duty exemption in relation to instrument of service agreement chargeable to duty executed between 1.1.2014 and 31.12.2022

-

Others

Incentives

Years

 

Anchor Companies under Industry4WRD Vendor Development Programme
Refer to “Manufacturing - Industry4WRD”

 
 


Brand name, quality and accreditation

 

Further deduction for advertising expenditure incurred on Malaysian brand names registered locally or overseas and professional fees paid to companies promoting / advertising Malaysian brand names

 

Double deduction for cost of obtaining quality system and standards certification

 

Single deduction for cost of obtaining accreditation for a laboratory or as a certification body

 

 

Export incentives for services sector

Further deduction of qualifying expenditure for the purpose of export of services / professional services

Allowance for increased export equal to 50% of the value of the increased export, deducted against 70% of statutory income

 

Employer related incentives
 

Further deduction for the remuneration paid to an employee who is physically or mentally handicapped

 

Further deduction on expenditure incurred for the provision and maintenance of child care centre for the benefit of their employees or childcare allowance given to their employees

 

Further deduction for employers hiring workers affected by accidents or critical illnesses and certified by SOCSO to be fit to work

 

Further deduction for the employment of senior citizens (60 years and above) or ex-convicts up to a monthly remuneration of RM4,000 (until YA 2025)

 

Single deduction for employers who have made payments of PTPTN loans on behalf of their full-time employees during the year 2019 to 2021, provided the payments made are not recoverable from the employees

 
Single deduction for provision of personal protective equipment to employees, purchase of thermal scanners and COVID-19 testing, and for next year, cost associated with self-funded booster vaccines 
 
Further deduction on specified expenditure for implementation of Flexible Working Arrangement (applications received by 31.12.2022)
 

 

Listing expenses

 
Single deduction of up to RM1.5 million on specified listing costs incurred (by prescribed technology-based companies, listing on ACE or LEAP Market (w.e.f YA 2020 until YA 2022)  

 

Social responsibility

Single deduction for expenditure incurred on environmental preservation and conservation projects including forest, island, beach and national park

Single deduction for approved expenditure incurred for maintenance of heritage building certified under the National Heritage Act

Tax deduction for contributions towards Digital Social Responsibility

Tax deduction for contributions to approved Social Enterprise.
Income tax exemption on all income of an accredited Social Enterprise up to 3 YAs (applications from 1.1.2022 to 31.12.2023)
Tax deduction for contributions to combat the COVID-19 pandemic 

 

Others

Deduction for specified expenditure incurred from 1.3.2020 to 31.12.2021, extended to 31.12.2022, on renovation and refurbishment of business premises up to RM300,000.

W.e.f. YA 2021 income tax rebate up to RM20,000 per YA for the first 3 years for new Small and Medium Enterprises and Limited Liability Partnerships incorporated / registered in Malaysia and commenced operations during the period from 1.7.2020 to 31.12.2021, extended to 31.12.2022.

Special tax deduction of amount of rent reduced for taxpayers which provide reduction in rent of at least 30%of original rent of business premises for:

  • SME tenants - April 2020 to December 2021, extended to June 2022.
  • All tenants - January 2021 to December 2021, extended to June 2022.

This publication is a quick reference guide outlining Malaysian tax information which is based on taxation laws and current practices. This booklet also incorporates in coloured italics the 2022 Malaysian Budget proposals based on the Budget 2022 announcement on 29 October 2021 and the Finance Bill 2021. These proposals will not become law until their enactment and may be amended in the course of their passage through Parliament.

This booklet is intended to provide a general guide to the subject matter and should not be regarded as a basis for ascertaining the liability to tax in specific circumstances. No responsibility for loss to any person acting or refraining from acting as a result of any material in this publication can be accepted by PricewaterhouseCoopers. Readers should not act on the basis of this publication without seeking professional advice.

 

Published by
PricewaterhouseCoopers Taxation Services Sdn Bhd (464731-M)
Level 10, 1 Sentral, Jalan Rakyat, Kuala Lumpur Sentral,
P.O. Box 10192, 50706 Kuala Lumpur, Malaysia
Tel: 03-21731188 Fax: 03-21731288


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