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.

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 (MoF).

The Government began the pilot phase of a New Investment Incentive Framework in 2025, aimed at promoting high-value activities. Additionally, economic clusters will be established based on regional specialisations. Special tax incentives will also be provided for investments in 21 economic sectors across various states in Malaysia, contingent upon the achievement of economic spillovers. Budget 2026 announced that the framework will be fully implemented for the manufacturing sector in the first quarter of 2026, followed by services sector in the second quarter of 2026.

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

Aerospace

Incentives		Years
Aerospace companies in Malaysia undertaking specified high-value manufacturing / services (applications received by 31.12.2025)
New company	Income tax exemption of 70% to 100% of statutory income (SI); or	5 to 10
New company	ITA of 60% to 100% on qualifying expenditure (QE) set-off against 70% to 100% of SI	5
Existing company	ITA of 60% on QE set-off against 70% of SI	5

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
Food production / security project Applications received by 31.12.2025 (Budget 2026 proposed extension to 31 December 2030)
Company investing in a subsidiary company which undertakes new food production project*	Tax deduction up to 3 consecutive YAs equivalent to the amount of investment made
Company undertaking food production project* Budget 2026 proposed rebranding to food security project and 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).
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).
Venture capital (VC)
Venture capital company (VCC) Budget 2026 proposed expansion to 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
	Budget 2026 proposed a 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). Budget 2026 proposed a 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	Budget 2026 proposed 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
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	Income tax exemption, or	5/10
	Income tax exemption equivalent to ITA (applications received by 31.12.2025)	5/10
Investment in manufacturing of electric vehicle charging equipment (applications received by 31.12.2025)	Income tax exemption of 100% of SI from YA 2023 to YA 2032, or ITA of 100% on QE set-off against 100% of SI	5
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 kindergarten 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 was proposed under Budget 2025
	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 was proposed under Budget 2025
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 to pursue technical and vocational certificate, diploma, bachelor’s degree, master’s degree or doctor of philosophy (scholarship agreement executed from 1.1.2022 to 31.12.2025) Budget 2026 proposed revision of double deduction to be for provision of scholarships to students pursuing vocational, diploma or bachelor’s degree, and expanded to include qualified professional certification courses (incentive period extended until YA 2030)
Public university teaching hospitals	Budget 2026 proposed that tax deduction be given for cash contributions to endowment funds established by the university. (From YA 2026)
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).
Double deduction for training costs under the Professional Training and Education for Growing Entrepreneurs (PROTÉGÉ-Ready to Work [RTW]) Programme (training programme approved up to 31.12.2025)
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
Budget 2026 proposed a 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)
Budget 2026 proposed a further 50% tax deduction, 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 senior citizens (60 years and above) or ex-convicts, inmates / ex-inmates of Henry Gurney School under the Malaysian Prison Department, and protection and rehabilitation institutions and care centres under the Social Welfare Department, with a monthly remuneration up to RM4,000 (until YA 2025) Budget 2026 proposed to extend to YA 2030, expanded to include Prisoners Released on License under Prisons Act 1995 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.

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

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. Scope proposed to include care allowance for parents or grandparents from YA 2025.

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, 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 31.12.2025, Budget 2026 proposed extension to 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 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 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): 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. Sustainable and Responsible Investments (SRI) fund approved by the SC
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 SC (until YA 2027)
Issuance cost of SRI-linked Sukuk			Tax deduction is given on the issuance costs of SRI-linked Sukuk that is approved or permitted or deposited with the SC. (w.e.f. YA 2023 to YA 2027)
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 (w.e.f. YA 2024)
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 was proposed to include qualifying Labuan takaful business activities and Labuan takaful related activities

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

Green incentives

Incentives		Years
GITA Project (Business purposes) Applications received from 1.1.2024 until 31.12.2026
Tier 1 (Green hydrogen)	ITA of 100% on QE set-off against 70% / 100% of SI	5+5
Tier 2 (Integrated waste management, electric vehicle charging station)	ITA of 100% on QE set-off against 100% of SI	5
Tier 3 (Biomass, biogas, mini hydro, geothermal, solar, wind energy)	ITA of 100% on QE set-off against 70% of SI	5
GITA Asset (Own consumption)
GITA assets purchased from 1.1.2024 until 31.12.2026 and applications received in the same period
Tier 1 (Qualifying assets approved by MoF, battery energy storage system, green building)	ITA of 100% on QE set-off against 70% of SI	-
Tier 2 (Qualifying assets approved by MoF, renewable energy system, energy efficiency)	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 Development and Measurement, Reporting and Verification related to carbon projects (verified by Malaysia 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	Budget 2026 proposed 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	Budget 2026 proposed a 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 Budget 2026 proposed expansion to include approved tourism activities (excluding concerts), international sports and recreational competitions	Income tax exemption of 50% of SI (w.e.f. YA 2020 to YA 2025) Budget 2026 proposed extension to YA 2027	-
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)
Organisers verified by Ministry of Tourism, Arts and Culture (w.e.f. YA 2026 to YA 2027)	Budget 2026 proposed income tax exemption of 100% of SI 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
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
Supply Chain Resilience Initiative Double deduction for multinational enterprise (MNE) expenditure of up to RM2 million per year Tax deduction of amount invested by MNEs or their suppliers investing in joint ventures with other local suppliers A tax incentive package based on performance will be given to local suppliers		3

Manufacturing

Incentives			Years
Main incentives
Manufacturers producing promoted products or engaged in promoted activities		PS with tax exemption of 70% of SI; or ITA of 60% on QE set-off against 70% of SI	5
Enhanced incentives
Manufacturer of selected machinery & equipment (M&E) and specialised M&E		PS with tax exemption of 100% of SI; or	10
		ITA of 100% on QE set-off against 100% of SI	5
High technology projects		PS with tax exemption of 100% of SI; or ITA of 60% on QE set-off against 100% of SI	5
Industrialised Building System (IBS) Components
Applications received by 31.12.2025
Companies producing IBS components or IBS system (at least 3 basic IBS components)		ITA of 60% on QE set-off against 70% of SI	5
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
Industry4WRD
Manufacturing 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 incurred from 2.1.2019 to 31.12.2025 (until YA 2026)
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 RM500,000 per YA for 3 consecutive YAs on QE incurred by an anchor company to carry out prescribed activities. (MOU signed with Ministry of Entrepreneur Development and Cooperatives from 1.1.2021 to 31.12.2025)

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)
Chemical and petrochemical manufacturing company 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		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 31.12.2025, Budget 2026 proposed extension to 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 31.12.2025)	-
	IBA of 10% on a commercial building within TRX (eligibility period until 31.12.2025)	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 (proposed to 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, listing on ACE, LEAP or Main Market (until YA 2025)

Budget 2026 proposed for the tax deduction to be expanded to technology-based companies and MSMEs in the technology, energy and utilities sector for another 5 years (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.

Budget 2026 proposed a tax deduction for cash contribution made to the Trust Account of the Department of Museums Malaysia.

Budget 2026 proposed a 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