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 a tax exemption granted to companies participating in promoted activities or producing promoted products, for a period of five or ten years.

The alternative to the PS incentive is investment tax allowance (ITA) which is granted based on the capital expenditure incurred on industrial buildings, plant and machinery used for promoted activities or promoted products. This incentive is generally given for a period of five or ten years.

PS and ITA are mutually exclusive. Tax exempt dividends may be paid out of income exempted under the PS incentive. Unutilised ITA can be carried forward until fully utilised. However unutilised PS losses can only be carried forward for a maximum period of seven consecutive YAs after the end of the pioneer period.

Malaysia has introduced a major reform through its New Incentive Framework (NIF) which adopts a tiered and outcome-based approach and replaces the traditional promoted-list approach. The NIF has been rolled out for the manufacturing sector since 1 March 2026 and will be followed by the services sector later.

The NIF aims to attract high-value investments to grow a sustainable and holistic economy and is anchored on the following six National Investment Aspirations:

Increase economic complexity
Create high-value job opportunities
Extend domestic linkages
Develop new and existing economic clusters
Improve inclusivity
Enhance Environmental, Social and Governance practices

In the following tables 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% of SI, or	5
	ITA of 60% on qualifying expenditure (QE) 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	Reinvestment Allowance of 60% of QE set-off against 70% of SI	15
Adoption of closed house system in the business of rearing chicken (QE incurred from YA 2023 to YA 2025)	Accelerated capital allowance of 100% of QE, and Income tax exemption of 100% on QE
Company in resource-based industries	PS with tax exemption of 70% of SI, or	5
Company in resource-based industries	ITA of 60% on QE set-off against 70% of SI	5
Automation capital allowance
Refer to the chapter on “Capital Allowance”
Food production / security project Applications received by 31.12.2025
Company undertaking food production project* and food security project which is restricted to income generated from domestic sales (Applications received 1.1.2026 to 31.12.2030):
New project	Income tax exemption of 100% of SI	10
Expansion project for existing company	Income tax exemption of 100% of SI	5

^{* including planting of seeds for agro-food and high seas fishing projects, and includes agricultural projects based on Controlled Environment Agriculture.}

Angel investor, Equity Crowdfunding and Venture Capital

Incentives		Years
Angel investor
Resident individual who invests in investee company (applications received by 31.12.2026)	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). Budget 2027 proposed that the tax exemption be extended for investment made from 1 January 2027 until 31 December 2030
Equity crowdfunding
Individual who invests (including through a Limited Liability Partnership nominee company) in equity crowdfunding from 1.1.2021 to 31.12.2026	Tax exemption of aggregate income for a sum equal to 50% of the amount invested (subject to conditions). Budget 2027 proposed that the tax exemption be extended for investment made from 1 January 2027 until 31 December 2030
Venture capital (VC)
Venture capital company (VCC), inclusive of entities incorporated as Limited Liability Partnerships	Tax exemption on SI from all sources of income, other than interest income from savings or fixed deposits and profits from Syariah-based deposits (first certification from the Securities Commission (SC) to be obtained by 31.12.2026).	5
	5% income tax rate on all income of the VCC, except for interest / profit income derived from savings, fixed deposits, or deposits. The VCC is required to invest a minimum of 20% of its funds in local venture companies (first certification from SC to be obtained by 31.12.2035).	10
Venture capital management company	Tax exemption on share of profits, performance & management fees from investment made by VCC (until YA 2026). 10% income tax rate on income derived from the share of profits, management fees and performance fees (w.e.f. YA 2025 to YA 2035).	-
Resident investing in VCC fund	Single deduction equivalent to the amount of investment made in a VCC not later than 31.12.2026, limited to RM20 million a year.	-
Resident investing in VC	Single deduction equivalent to the amount of investment in a VC not later than 31.12.2026.	-
Individual shareholders of VCC	Tax exemption on dividends paid, credited or distributed to individual shareholders at the first level (w.e.f. YA 2025 to YA 2035).	-

Automotive

Incentives		Years
Automotive companies in Malaysia undertaking qualifying activities under the New Incentive Framework (applications submitted from 1.3.2026)
New investment	Special Tax Rate (STR) of 0% to 10%	Up to 10
	ITA of up to 100%, off-setting 70% -100% of statutory income	Up to 10
Less developed areas	STR of 0% to 15%	Up to 15
	ITA of up to 100%, off-setting 70% -100% of statutory income	Up to 10
Small companies	STR of 3% - 12%	Up to 15
	ITA of up to 100%, off-setting 70% -100% of statutory income	Up to 10
Rental of non-commercial electric vehicles	Tax deduction on rentals incurred from YA 2023 to YA 2027 (capped at RM300,000)

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 QE 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 QE set-off against 70% of SI	5

Digital Ecosystem Acceleration Scheme (DESAC)

Incentives		Years
Application received by 31.12.2027 must pertain to qualifying activities carried out by digital infrastructure providers, specifically involving submarine cables including cable landing stations, or data centres and cloud computing / data centre and data hosting
New company which carries on a qualifying activities as digital infrastructure provider (Tier 1 – subject to additional conditions)	ITA of 100% on QE (excludes land) set-off against 100% of SI, or Income tax rate of 10% on SI	5+5
New company which carries on a qualifying activities as digital infrastructure provider (Tier 2 – subject to minimum conditions)	ITA of 60% on QE (excludes land) set-off against 100% of SI, or Income tax rate of 15% on SI	5+5
Existing company with approved DESAC incentive and plans to undertake expansion projects (Tier 1 – subject to additional conditions)	ITA of 60% on QE (excludes land) set-off against 70% of SI	5
Existing company with approved DESAC incentive and plans to undertake expansion projects (Tier 2 – subject to minimum conditions)	ITA of 30% on QE (excludes land) set-off against 70% of SI

Education & Training

Incentives		Years
Kindergarten	Tax exemption of SI derived from the provision and maintenance of the kin dergarten business	5
Non-profit oriented school / international school	Tax exemption 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 QE 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	-
	Single deduction (claimable in full in the YA when the expense is incurred) for the development of new courses focusing on digital technology and innovation from YA 2025 to YA 2030
	Import duty exemption for educational equipment	-
Private skills training institutions	Single deduction (claimable in full in the YA when the expense is incurred) for the development of Technical and Vocational Education and Training (TVET) courses from YA 2025 to YA 2030
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 QE 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	-
Company providing / sponsoring scholarships	Double deduction for provision of scholarships to qualifying Malaysian students pursuing technical and vocational certificate, diploma, bachelor’s degree, or professional certificate (scholarship agreement executed from 1.1.2026 to 31.12.2030)
Double deduction for provision of Structured Internship Programme approved by Talent Corporation Malaysia Berhad, including structured training conducted by industry regulatory bodies (YA 2026 to YA 2030).
Single deduction for expenditure incurred for the provision of practical training to Malaysian resident 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
Tax deduction for new equipment and machinery donated to Public Skills Training Institutes, polytechnics, or registered vocational colleges, proposed from YA 2025 to YA 2027
Double deduction for companies sponsoring care workers, who are not their employees, to undergo training programmes in institutions recognised by Ministry of Women, Family and Community Development (w.e.f. YA 2026 to YA 2027)
A further deduction of 50% given once in two years for expenses incurred by MSME on recognised Artificial Intelligence (AI) and cyber security training (Applications from 1.1.2026 to 31.12.2027)

Employment expenditure

Incentives

Inclusive employment

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

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 the following citizen with a monthly remuneration up to RM4,000 (until YA 2030):

Senior citizens (60 years and above)

Ex-convicts

Parolees

Prisoners released on license under Prisons Act 1995

Ex-drug dependants as well as drug / substance dependants and misusers undergoing treatment and rehabilitation provided under the Drug and Substance Dependants and Misusers (Treatment and Rehabilitation) Act 1983

Inmates / ex-inmates of Henry Gurney School under the Malaysian Prison Department

Protection and rehabilitation institutions and care centres registered under the Social Welfare Department

50% further deduction for employment expenses paid for a period of 12 months for hiring women returning to work*

Tax deduction for PTPTN loan repayment made by employer on behalf of employees for 2 years from 1 January 2027 until 31 December 2028, subject to the following conditions:

No payment shall be imposed to the employee for the PTPTN loan made by the employer;

The employee must be a full-time employee; and

The employee must not be the owner of the business or have family ties with the employer.

(Budget 2027 proposal)

Well-being support

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

Further deduction on expenses incurred for employees in relation to care allowance for parents, adoptive parents or grandparents.

Single deduction for provision of personal protective equipment to employees, purchase of thermal scanners and COVID-19 testing

50% further deduction for additional paid leave up to 12 months provided to employees caring for children under the age of two years, ill or disabled family members* 

50% further deduction for expenses on capacity building and software acquisition for implementing flexible work arrangements, capped at RM500,000 (one-off claim)*

^{* Applications received by Talent Corporation Malaysia Berhad from 1.1.2025 until 31.12.2027}

Environment, social and governance

Incentives

Single deduction for approved expenditure incurred on environmental preservation and conservation projects, or for maintenance of heritage building certified under the National Heritage Act 2005

Tax deduction for contributions or sponsoring activities related to tree planting, environmental preservation and conservation awareness projects verified by Forest Research Institute Malaysia (applications received by 31.12.2026)

Tax deduction for contributions to approved Social Enterprise

Income tax exemption on all income of an accredited Social Enterprise up to 3 YAs (applications received by 31.12.2028)

Tax deduction up to RM50,000 for each YA on the following expenditure incurred on Environmental, Social and Governance (ESG) related expenditure (w.e.f. YA 2024 until YA 2027):

Qualifying expenditure on ESG reporting incurred by financial institutions and listed companies

Preparation of Tax Corporate Governance Framework report and contemporaneous transfer pricing documentation incurred by companies and Labuan companies

Consultation fees and services fees for development of customized software for e-Invoicing implementation incurred by MSMEs

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 / PTF 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 IBA 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 in real property
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 on SI derived from the business of providing fund management services in respect of (until YA 2027): 1. At 60% of SI for funds managed in accordance with Syariah principles and certified by SC to the following investors: - local investors in Malaysia and foreign investors, - Business Trust and REIT in Malaysia. Budget 2027 proposed that tax exemption at 40% of SI derived from the business of providing fund management services in accordance with Syariah principles and certified by SC be extended from YA 2028 to 2030 2. Sustainable and Responsible Investments (SRI) fund approved by the SC
Islamic Finance

Issuance cost of SRI Sukuk	Tax deduction is given on the issuance costs of SRI Sukuk approved, authorised by or lodged with the SC (until YA 2027)
Issuance cost of SRI-linked Sukuk	Tax deduction is given on the issuance costs of SRI-linked Sukuk approved, authorised by or lodged with the SC (until YA 2027)
Issuance cost of Sukuk Prisma	Budget 2027 proposed that tax deduction be given on issuance costs of Sukuk Prisma approved or authorised by SC or lodged with SC for YA 2027 to 2030
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)
Islamic Securities Selling and Buying (ISSB)	Income tax exemption on income arising from ISSB
Labuan trading activity in relation to Islamic Finance	Income tax exemption from YA 2024 to YA 2028 for a Labuan entity that derives income from prescribed qualifying activities in relation to Islamic Finance, w.e.f. YA 2025 to YA 2028, the scope of exemption includes qualifying Labuan takaful business activities and Labuan takaful related activities
Skim Sukuk SRI and Bond Grant	Budget 2027 proposed income tax exemption on grant received under Skim Sukuk SRI and Bond Grant with effect from 1 January 2027

Global Services Hub

Incentives		Years
Applications received from 14.10.2023 until 31.12.2027
Global Services Hub tax incentive based on outcome-based approach on service income, or services & trading income as follows:
New company	Income tax rate of 5% (Tier 1) or 10% (Tier 2)	5+5
Existing company	Income tax rate on value-added income at 5% (Tier 1) or 10% (Tier 2)	5
Non-citizen individuals holding key / C-Suite positions	Income tax at 15% (up to 3 resident individuals with monthly salary of at least RM35,000)	3
Budget 2027 proposed Applications received by MIDA from 1 January 2027
Global Services Hub incentive based on outcome-based approach on service income or services & trading income, and Treasury Fund Management activity income as prescribed by MoF, with incentive period every 5 years up to maximum of 30 years, as follows:
New company	Income tax rate of 5%
Existing company	Income tax rate on income > base income at 5% or ≤ base income at 15%
Treasury Fund Management activity	a. Withholding tax exemption on interest paid to non-residents; and b. Stamp duty exemption of 100% on loan agreements between companies in foreign currencies. The above are expanded to Johor-Singapore Special Economic Zone (JS-SEZ) incentive package

Green incentives

Incentives		Years
GITA Project (Business purposes) Applications received from 1.1.2024 until 31.12.2026 (Budget 2027 proposed extension until 31 December 2030)
Tier 1 (Green hydrogen) Budget 2027 proposed expansion to include Ocean Thermal Energy Conversion	ITA of 100% on QE set-off against 70% / 100% of SI	5+5
Tier 2 (Integrated waste management, electric vehicle charging station) Budget 2027 proposed revised Tier 2 (Electric vehicle charging station, renewable energy system)	ITA of 100% on QE set-off against 100% of SI Budget 2027 proposed ITA of 60% on QE set-off against 70% of SI	5
Tier 3 (Biomass, biogas, mini hydro, geothermal, solar, wind energy)	ITA of 100% on QE set-off against 70% of SI Budget 2027 proposed removing Tier 3 and moving the renewable energy system to Tier 2 (excluding solar)	5
GITA Asset (Own consumption)
GITA assets purchased from 1.1.2024 until 31.12.2026 and applications received in the same period (Budget 2027 proposed extension until 31 December 2030)
Tier 1 (Qualifying assets approved by MoF, battery energy storage system, green building) Budget 2027 proposed revised Tier 1 (Qualifying assets approved by MoF, renewable energy integrated system + battery energy storage system/energy storage system)	ITA of 100% on QE set-off against 70% of SI	-
Tier 2 (Qualifying assets approved by MoF, renewable energy system, energy efficiency) Budget 2027 proposed revised Tier 2 (Qualifying assets approved by MoF, renewable energy system)	ITA of 60% on QE set-off against 70% of SI	-
GITE Solar Leasing
Applications received from 1.1.2024 until 31.12.2026
Company undertaking solar leasing activities	Income tax exemption of 70% of SI
	Capacity of >3MW - ≤10MW	5
	Capacity of >10MW - ≤30MW	10
Voluntary Carbon Market
Development of carbon projects registered with an international standards body recognised by Bursa Malaysia (applications received by 31.12.2026)	Further tax deduction up to RM300,000 for costs incurred on Measurement, Reporting and Verification related to the development of carbon projects (verified by Malaysian Green Technology and Climate Change Corporation), against income from trading of carbon credits at Bursa Carbon Exchange	-
Smart Artificial Intelligence (AI)-Driven Reverse Vending Machine
Contributions / sponsorships of smart vending machines (applications received by 31.12.2026)	Tax deduction for the contributions or sponsorships (cash or financing) of smart vending machine which utilises smart AI

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 QE set-off against 100% SI	5
Halal industry players located in designated halal parks:
New companies producing prescribed halal products	100% tax exemption on QE; 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 QE	5
	Import duty exemption on equipment, components and machinery used in cold room operations	-
Halal logistics operators	100% tax exemption; or 100% tax exemption on QE	5
Halal logistics operators	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
Mines Wellness City (MWC)
MWC developer (undertaking new development in MWC) ^{Note 1 - From the first YA the MWC developer derives SI until YA 2026}	Income tax exemption of 100% of SI from rental of a building or part of a building located in MWC	Note 1
MWC operator	PS with tax exemption of 70% of SI derived from qualifying activities carried out in the MWC; or ITA of 60% on QE set-off against 70% of SI for each YA. (Applications received by 31.12.2026)	5 5
Professional services
Export of medical and dental services	Further deduction of QE incurred for the purpose of the export of services / professional services	-
Charitable hospitals registered as Company Limited by Guarantee	Income tax exemption equivalent to the amount of expenses incurred for charity
	Tax deduction up to 10% of aggregate income for donors.

Hotel & Tourism

Incentives		Years
Hospitality and accommodation
Medium & low-cost hotels up to 3-star / holiday camps & recreational projects / convention centre / tourism projects	Income tax exemption of 70% of SI; or ITA of 60% on QE set-off against 70% of SI	5 5
Reinvestment in hotels – companies expanding, modernising and renovating (up to 3 rounds of reinvestment)	ITA of 60% on QE set-off against 70% of SI	5
Reinvestment in tourism projects (up to 2 rounds of reinvestment )	Income tax exemption of 70% of SI; or ITA of 60% on QE set-off against 70% of SI	5 5
Extension and modernisation of existing hotel buildings	Refer to the chapter on “Capital Allowance”	-
Tourism and recreational
Hotel / Tour operators	Further deduction on overseas promotion of tourism in Malaysia	-
Tour operators	100% tax exemption on the incremental income derived from inbound tourism packages where at least 1,000 foreign tourists are brought in annually (w.e.f. YA 2026 to YA 2027)
Tourism project operators	Tax deduction on QE incurred from 11.10.2025 to 31.12.2027 (capped at RM500,000) for renovation and refurbishment works
International theme park for tourism project (New investment)	PS with tax exemption of 100% of SI, or ITA of 100% on QE set-off against 70% of SI	5
Cultural and events
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]	-
Approved arts, cultural, sports and recreational activities organiser, including approved tourism activities (excluding concerts), international sports and recreational competitions	Income tax exemption of 50% of SI (w.e.f. YA 2020 to YA 2027)	-
Organisers verified by Ministry of Tourism, Arts and Culture *(Budget 2027 proposed an extension until YA 2030)**	Income tax exemption of 100% of SI (w.e.f. YA 2026 to YA 2027*) where the number of foreign participants brought in annually is at least: 1,500 for incentive trips 2,000 for conferences 3,000 for trade exhibitions

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 undertaking or intending to expand / diversify into integrated logistics service (ILS)	Income tax exemption of 70% of SI, or ITA of 60% on QE set-off against 70% of SI	5
Malaysian shipping companies	Income tax exemption of 70% or	-
	Full income tax exemption from YA 2024 to 2026, to each ship subject to obtaining the annual certification from the Ministry of Transport on complying the following conditions:- Annual operating expenditure in Malaysia of at least RM250,000; and Employ adequate number of full-time employees in Malaysia 4 Malaysian onshore employees comprising of Chief Executive Officer, an administrative and finance officer, an operating officer and an officer responsible for health, protection, safety and environmental affairs; and Employees who are ship personnel under Part III of the Merchant Shipping Ordinance 1952, the employees shall meet the minimum requirement as specified in the Safe-Manning Certificate issued by the Marine Department of Malaysia.	3
	Budget 2027 proposed that full income tax exemption from YA 2027 to 2036 subject to meeting the conditions:- Strategic management and effective control implemented in Malaysia; Annual operating expenditure in Malaysia of at least RM250,000 for each Malaysian ship; Employ at least 4 Malaysian citizens with an average monthly salary of RM15,000 for each Malaysian ship.	10
Smart Logistics Complex (SLC)
Company engaged in SLC activities (regional distribution centre / ILS / dangerous goods storage / cold chain facility) with adoption of IR4.0 elements (applications received from 1.1.2025 to 31.12.2027)	ITA of 60% on QE set-off against 70% of SI	5
Ship building and repairing Applications received by 31.12.2027
New company	PS with tax exemption of 70% of SI, or ITA of 60% of QE set-off against 70% of SI	5
Existing company	ITA of 60% of additional QE set-off against 70% of SI	5

Manufacturing

Incentives			Years
Companies undertaking manufacturing activities in 15 qualifying subsectors* under the New Incentive Framework (applications received from 1.3.2026)
New investment		Special Tax Rate (STR) of 0% to 10%; or	up to 10
		ITA of 100% on QE set-off against 70% to 100% of SI	up to 10
Less developed areas		STR of 0% to 15%; or	up to 15
		ITA of 100% on QE set-off against 70% to 100% of SI	up to 10
Small companies		STR of 3% to 12%; or	up to 15
		ITA of 100% on QE set-off against 70% to 100% of SI	up to 10
*The 15 sub-sectors are: Aerospace; Chemical & chemical products; Automotive, Machinery & equipment; Food productions & processing; Electrical & electronics; Pharmaceuticals, Medical devices; Metal; Oleochemicals & their derivatives; Wood, paper & furniture; Rubber-based products; Strategic mineral-based products; Petroleum products & petrochemicals; Textile, apparel & footwear.
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
Reinvestment under the New Industrial Master Plan 2030 (NIMP 2030)
Companies reinvesting in expansion or diversification in prescribed activities under the NIMP 2030 (application received by 31.12.2028)	ITA based on outcome approach:
	Tier 1 - QE of 100% set-off against 100% of SI		5
	Tier 2 - QE of 60% set-off against 70% of SI		5
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
Supply Chain Resilience Initiative
Strategic Anchor (multinational company or large local corporation in certain strategic sectors)		Double deduction on qualifying expenditure incurred to support and develop qualifying local vendors, up to RM2 million per year (agreements signed with local vendors from 1.1.2025 to 31.12.2030)	3
Strategic Anchor or its foreign-based suppliers investing in joint ventures with other local suppliers		Tax deduction equivalent to 20% of total investment, up to RM100 million (investments made from 1.1.2025 to 31.12.2030) to be claimed over five years
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	-

Malaysia Digital

Incentives		Years
Malaysia Digital (MD) Status
MD status company that undertakes qualifying activity by utilising MD promoted tech enablers
New investment	0% reduced tax rate (RTR) on qualifying IP income and 5% or 10% RTR on qualifying non-IP income; or	up to 10
	ITA of 60% or 100% on QE set-off against 100% of SI	5
Expansion	15% RTR on qualifying IP and non-IP income; or	5
	ITA of 30% or 60% on QE set-off against 100% of SI	5
Others
Owner of a building in Cyberjaya Flagship Zone used for his business or rented to an approved MD status company	IBA at 10% of the qualifying building expenditure incurred for approved activities	10

National & Strategic Projects

Incentives		Years
Approved business eligible for special incentive scheme (as determined by MoF)	Tax exemption of SI; or	up to 15
	Tax exemption equivalent to amount of QE set-off against SI	up to 10
Approved services projects in areas of transportation, communications and utilities (incentive rates and period as determined by MoF)	Investment Allowance of 60% to 100% on QE set-off against 70% to 100% of SI, or	5
	Tax exemption of 70% to 100% of SI	5 or 10
	IBA	-
	Import duty exemption on machinery and equipment	-
Projects / products of national strategic importance	PS with tax exemption of 100% of SI; or ITA of 100% on QE set-off against 100% of SI	up to 10 5

Oil & Gas

Incentives		Years
Chargeable person carrying out petroleum operations in qualifying project	Investment Allowance of 60% of QE set-off against 70% of SI in respect of a qualifying project or infrastructure asset as determined by the Minister	10
Labuan International Commodity Trading Company which undertakes qualifying activity under the Global Incentives for Trading programme	Tax exemption on income derived purely from the trading of physical and related derivatives instruments of liquefied natural gas (LNG)	3
	Taxed at 3% on chargeable profits derived from the trading of physical and related derivatives instruments of: petroleum and petroleum-related products including LNG, minerals, agriculture products, refined raw materials, chemicals, base minerals, coal	-
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%
	ACA (IA 20%, AA 40%) 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
Pre-petroleum agreement executed by a partner to a partnership on or after 1 January 2024	Deduction for expenses for data acquisition and seismic studies incurred in an area commissioned and verified by PETRONAS within 3 years preceding execution of petroleum agreement
Pengerang Integrated Petroleum Complex (PIPC) (Applications received by 31.12.2028)
Company manufacturing specified chemical and petrochemical product with minimum capital investment (excluding land) of RM500 million	Income tax rate of 5% / 10% on income from qualifying activities, or ITA of 100% / 60% set-off against 100% of SI Stamp duty exemption on the following instrument executed for the qualifying project / activity: Transfer of land or building; or Rental of land or building.		Up to 10

Developers of industrial areas in the PIPC	Income tax rate of 10% on income from sale or rent of land / buildings for a qualifying project		10
	Stamp duty exemption on the following instruments executed in relation to the development of qualifying project/activity: Transfer of land or building; or Rental/lease of land or building.

Research and Development (R&D)

Incentives		Years
In-house R&D
In-house R&D project	ITA of 50% on QE set-off against 70% of SI	10
In-house R&D 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 services
Contract R&D company	PS with tax exemption of 100% of SI; or	5
Contract R&D company	ITA of 100% on QE set-off against 70% of SI	10
R&D status company	ITA of 100% on QE set-off against 70% of SI	10
Any person resident in Malaysia 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 or contract R&D company	-
R&D undertaken by a person or on his behalf	Single deduction for R&D expenditure	-
Building used for approved research or by an R&D or contract R&D company	IBA (IA 10%, AA 3%)	-
Commercialisation of R&D findings
Qualifying company undertaking commercialisation of R&D findings	Tax exemption of SI derived from the commercialisation of R&D findings in: resource-based industry owned by public research institute (PRI) / public institute of higher learning (PIHL) prescribed non-resource based activities / products owned by PRI or public/private higher learning institutes (HLI)	10
Qualifying company investing in commercialisation of R&D findings	Single deduction for value of investment made to its related company which undertakes the commercialisation of R&D findings in: resource-based industry owned by PRI / PIHL prescribed non-resource based activities / products owned by PRI or public / private HLI (Applications received by 31.12.2030)	-
Technological innovations
Approved New Technology Based Firm	Tax exemption on adjusted income consisting of the development or commercialisation of technological innovations	5

Tun Razak Exchange (TRX)

Incentives		Years
Approved 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 2025); rental of building or part of a building within TRX (until YA 2027)	5
TRX Marquee status company	ACA (IA 20%, AA 40%) on renovation cost on a building or part of a building located in TRX (until 31.12.2030)	-
	IBA of 10% on a commercial building within TRX (eligibility period until 31.12.2030)	10
	50% further deduction for rental of commercial building used for the purpose of its business in TRX (eligibility period until 31.12.2025)	10
	Single deduction for prescribed relocation costs to relocate part or whole business to TRX. Relocation to take place no later than 31.12.2025.

Others

Incentives

Brand name, quality and accreditation

Further deduction for advertising expenditure and professional fees incurred to promote / advertise 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 QE for the purpose of export of services / professional services

Allowance for increased export equal to 50% of the value of the increased export of qualifying services, include Integrated Circuit Design services w.e.f. YA 2025, set-off against 70% of SI 

Listing expenses

Single deduction of up to RM1.5 million on specified listing costs incurred by prescribed technology-based companies (expanded to include MSMEs in the energy and utilities sectors), listing on ACE, LEAP or Main Market (until YA 2030)

Others

Tax deduction up to 10% of aggregate income for contributions made to the Tabung Komuniti Filem dan Pembangunan Filem Kenegaraan under FINAS.

Tax deduction for cash contribution made to the Trust Account of the Department of Museums Malaysia.

Tax deduction equivalent to 10% of eligible expenses, capped at RM10 million, for renovation and conversion of commercial buildings to residential buildings.

Tax deduction up to 10% aggregate income, for contribution to non-profit based organisations involved in the development of sport at grassroot levels

Tax deduction up to 10% aggregate income, for contribution to public universities (Budget 2027 proposal)

Tax deduction provided to companies that implement Madani Talent Training Programme from 29 June 2026 to 31 December 2030 (Budget 2027 proposal)

Tax deduction for locally wholly-owned automotive vendor companies to relocate the operation to Automotive Hi-Tech Valley, Tanjong Malim on qualifying relocation costs of up to RM5 million for expenses incurred from 1 January 2027 to 31 December 2030 (Budget 2027 proposal)