Tax exemptions for foreign investors in Malaysia

2022年07月13日（水）

We published a newsletter regarding Tax exemptions for foreign investors in Malaysia.
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→Tax exemptions for foreign investors in Malaysia

Tax exemptions for foreign investors in Malaysia

July 2022
One Asia Lawyers Group
Yuki Hashimoto
Lawyer (Japan)
　 Heng Zhen Hung
Lawyer (Malaysia)

１．Tax exemptions for foreign investors in Malaysia

According to the 2022 Milken Institute Global Opportunity Index (GIO), Malaysia is the most attractive destination in Southeast Asia for foreign investors. Behind this success are the irresistible tax incentives offered by the Malaysian government.

Tax incentives in Malaysia, direct and indirect, are provided for in the Promotion of Investments Act 1986, Income Tax Act 1967, Customs Act 1967, Excise Act 1976 and Free Zones Act 1990.

２．Some of the major incentives are as follows,

　１）Pioneer status (income tax exemption ranging from 70% to 100% for a period of 5 to 10 years);

　２）Investment tax allowance (60% to 100% on qualifying capital expenditure incurred within 5 years);

　３）Reinvestment Allowance (60% on qualifying capital expenditure incurred for 15 consecutive years); and

　４）Import Duty Exemption/Customised Packaged Investment incentives.

(1) There are different types of incentives available for new and existing foreign investors in Malaysia.

Generally, new investors are eligible to enjoy all incentives if they are providing the promoted activities or promoted products. Whereas existing foreign investors’ options are more limited, for example, existing investors may be able to get,

– Green technology incentive;

– Principal Hub / Global Trading Centre incentive; and

– Reinvestment allowance

(2) Importance to understand these incentives

Many foreign investors are unaware of their eligibility for these incentives, and thus, have been paying taxes that could have been exempted.

One Asia Lawyers have excellent contacts with government agencies that will be approving these tax incentives.

Below is a list of incentives that are available as of 24 June 2022.

No.	Name of Incentive	Ministry	Agency	Sector
1.	BioNexus Status & Tax Incentives (BNX) (For companies undertaking biotechnology activities)	MAFI – Ministry of Agriculture and Food Industries	Bioeconomy – Malaysian Bioeconomy Development Corporation Sdn Bhd	Manufacturing Services
2.	Multimedia Super Corridor (MSC) Status – Services (For companies with MSC status)	MCM – Ministry of Communications and Multimedia	MDEC – Malaysia Digital Economy Corporation (MDEC) Sdn. Bhd.	Services
3.	Halal Logistics Operator (For companies acting as Halal Logistic Operators)	MITI – Ministry of International Trade and Industry	HDC – Halal Development Corporation	Services
4.	Halal Park Operator (For companies with HALMAS status)	MITI – Ministry of International Trade and Industry	HDC – Halal Development Corporation	Services
5.	Incentive for Automation Capital Allowance (For companies wishing to automate their business, applicable to both manufacturing and services sectors)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing Services
6.	Incentive for In-house Research And Development (R&D) (For companies carrying out R&D within the company in Malaysia for the purpose of its own business)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing Services
7.	Incentive for Reinvestment for Food Processing (For companies reinvesting in food processing activities)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
8.	Incentives For Companies Providing Cold Chain Facilities (For companies providing cold chain facilities and services for perishable agricultural products)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
9.	Incentive for Aerospace Industry (For companies manufacturing and providing aero-related services, available for new and existing companies)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
10.	Incentive for Reinvestment in Resource-Based Industries (For companies in rubber, oil palm and wood-based industries)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
11.	Incentive for Production of Halal Food Products (For companies producing Halal food products)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
12.	Incentive for Utilisation of Oil Palm Biomass to Produce Value Added Products (For companies using oil palm biomass to produce value-added products such as bio-based chemicals, biofuel, particle board, medium density fibreboard, plywood and pulp & paper)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
13.	Incentive for Research And Development (R&D) Company (For companies providing R&D services to its related companies or any other company)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
14.	Contract Research And Development (R&D) (For companies providing R&D services under contract to its related companies or any other company)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
15.	Incentives for Selected Industries (For companies producing a list of approved machinery and equipment)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
16.	Incentive for Research And Development (R&D) (Reinvestment) (For existing companies that are carrying out R&D services for themselves, its related companies or any other company)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
17.	Incentive for Technical or Vocational Training Centre (For new and existing companies providing technical or vocational training for the manufacturing sector)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
18.	Incentive for Hotel (New Investment) (For companies making investments in 1 to 3 star hotels and tourism projects)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
19.	Incentive for Tourism Project (New Investment) (For companies making investments in tourism projects)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
20.	Incentive for Mines Wellness City (MWC) (For all companies involved in Mines Wellness City)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
21.	Incentive for Tourism Projects (Reinvestment) (For companies reinvesting in the expansion and modernisation of tourism projects)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
22.	Integrated Logistic Services (ILS) (For companies providing integrated logistics services)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
23.	Incentive for Hotel Projects (Reinvestment) (For companies reinvesting in the expansion and modernisation in 1 to 5 star hotels)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
24.	Incentive for Private Higher Education Institution (For private education institutions providing approved science courses)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
25.	Incentives for Industrialised Building System Components (For new companies providing Industrialised building system components)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
26.	Incentives for Green Technology (For new and existing companies using green technology services and systems – high incentives are provided)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
27.	Incentive for the Private Healthcare Facilities (For companies establishing new private healthcare facilities or existing private healthcare facilities undertaking expansion/modernisation/refurbishment for purposes of promoting healthcare travel)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
28.	Incentive For Intellectual Property (IP) Development (For new and existing companies owning rights of the qualifying intellectual properties)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Primary Manufacturing Services
29.	Global Trading Centre (GTC) (For new and existing companies that use Malaysia as its international trading base for undertaking strategic sourcing, procurement and distribution of raw materials, components and finished products to its related and unrelated companies in Malaysia and abroad – high incentives provided)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
30.	Principal Hub 3.0 (For companies using Malaysia as a base for conducting its regional or global businesses and operations to manage, control, and support its key functions including management of risks, decision making, strategic business activities, finance, management and human resource – high incentives are provided)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Services
31.	Incentive for Manufacturers of Pharmaceutical Products Including Vaccines (For companies manufacturing pharmaceutical products)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
32.	Special Tax Incentives Under the National Economic Recovery Plan (PENJANA) (For new and existing companies undertaking approved manufacturing activities)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
33.	Incentives for Small Scale Companies (For small scale companies undertaking approved activities)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Primary Manufacturing
34.	Incentives for High Technology Projects (For new companies undertaking promoted activities in the Hi-Tech list)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing
35.	Incentives for General Investments (For new companies providing activities under the General list)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Primary Manufacturing Services
36.	Incentive for Shipbuilding and Ship Repairing Industry (For new and existing companies in the shipbuilding and ship-repairing industry)	MITI – Ministry of International Trade and Industry	MIDA – Malaysian Investment Development Authority	Manufacturing Services
37.	Angel Tax Incentive (For investors investing in new start-ups in Malaysia)	MOF – Ministry of Finance Malaysia	CRADLE – Cradle Fund Sdn Bhd	Manufacturing Services
38.	Annual Certification For Tax Incentive For The Islamic Fund Management Industry (For companies providing Islamic fund management services)	MOF – Ministry of Finance Malaysia	SC – Securities Commission Malaysia	Services
39.	Venture Capital Tax Incentives (For companies providing services in the venture capital industry)	MOF – Ministry of Finance Malaysia	SC – Securities Commission Malaysia	Services
40.	ECERDC Incentives for Knowledge, Education & ICT Development (For companies that are the first company in undertaking approved activities in the East Coast Economic Region)	PMD – Prime Minister’s Department	ECERDC – East Coast Economic Region Development Council	Services
41.	ECERDC Talent Enhancement Programme (ETEP) (For companies operating or intending to operate in East Coast Economic Region)	PMD – Prime Minister’s Department	ECERDC – East Coast Economic Region Development Council	Primary Manufacturing Services
42.	ECERDC Incentives for Oil & Gas and Petrochemical (For companies that are the first company in undertaking approved activities in the East Coast Economic Region)	PMD – Prime Minister’s Department	ECERDC – East Coast Economic Region Development Council	Manufacturing Services
43.	ECERDC Incentives for Tourism (For companies that are the first company in undertaking approved activities in the East Coast Economic Region)	PMD – Prime Minister’s Department	ECERDC – East Coast Economic Region Development Council	Services
44.	ECERDC Incentives for Industrial Parks / Free Zone Development (For companies that are the first company in undertaking approved activities in the East Coast Economic Region)	PMD – Prime Minister’s Department	ECERDC – East Coast Economic Region Development Council	Services
45.	ECERDC Incentives for Manufacturing & Manufacturing-related Services (For companies that are the first company in undertaking approved activities in the East Coast Economic Region)	PMD – Prime Minister’s Department	ECERDC – East Coast Economic Region Development Council	Manufacturing
46.	ECERDC Incentives for Agriculture & Agriculture-related Services (For companies that are the first company in undertaking approved activities in the East Coast Economic Region)	PMD – Prime Minister’s Department	ECERDC – East Coast Economic Region Development Council	Primary
47.	Incentive for Medini – Approved Development Manager (For companies providing management, supervisory, or marketing services at Medini)	PMD – Prime Minister’s Department	IRDA – Iskandar Regional Development Authority	Services
48.	Incentive for Medini – Approved Developer (For companies renting or selling a building or part/unit of a building at Medini)	PMD – Prime Minister’s Department	IRDA – Iskandar Regional Development Authority	Services
49.	Incentive for Iskandar Malaysia Studios – IDR Status Company (For companies providing creative services at Medini/Iskandar studios)	PMD – Prime Minister’s Department	IRDA – Iskandar Regional Development Authority	Services
50.	Medini Incentive Support Package (ISP) – IDR Status Company (For companies providing approved services at Medini/Iskandar studios)	PMD – Prime Minister’s Department	IRDA – Iskandar Regional Development Authority	Services
51.	NCER Incentives for Manufacturing (For companies providing manufacturing services in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Manufacturing
52.	NCER Incentives for R&D Activities (For companies providing R&D services in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Services
53.	NCER Incentives for Agriculture & Bio-industries (For companies providing agricultural and bio-industries services in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Primary Manufacturing Services
54.	NCER Incentives for Tourism (For companies providing tourism services in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Services
55.	NCER Incentives for Logistics (For companies providing logistics services in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Services
56.	NCER Incentives for Education (For companies providing educational services in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Services
57.	NCER Incentives for Kedah Science & Technology Park (KSTP) (For companies undertaking a qualifying project or activity in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Manufacturing Services
58.	NCER Incentives for Chuping Valley Industrial Area (CVIA) (For companies undertaking a qualifying project or activity in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Manufacturing Services
59.	NCER Incentives for Kedah Rubber City (KRC) (For companies undertaking a qualifying project or activity in the Northern Corridor Economic Region)	PMD – Prime Minister’s Department	NCIA – Northern Corridor Implementation Authority	Manufacturing Services
60.	SDC Incentives in Integrated Livestock Valley (ILV), Keningau (For companies undertaking a qualifying project or activity in the designated area)	PMD – Prime Minister’s Department	SEDIA – Sabah Economic Development and Investment Authority	Manufacturing
61.	SDC Incentives in Marine Integrated Cluster (MIC) – Semporna, Lahad Datu, Kunak & Tawau (For companies undertaking a qualifying project or activity in the designated area)	PMD – Prime Minister’s Department	SEDIA – Sabah Economic Development and Investment Authority	Manufacturing
62.	SDC Incentives in Kinabalu Gold Coast Enclave (KGCE) – Tuaran, Kota Belud, Kota Marudu & Kudat (For companies undertaking a qualifying project or activity in the designated area)	PMD – Prime Minister’s Department	SEDIA – Sabah Economic Development and Investment Authority	Services
63.	SDC Incentives in Palm Oil Industry Cluster (POIC) – Lahad Datu & Sandakan (For companies undertaking a qualifying project or activity in the designated area)	PMD – Prime Minister’s Department	SEDIA – Sabah Economic Development and Investment Authority	Manufacturing
64.	SDC Incentives in Sabah Agro-Industrial Precinct (SAIP) – Kimanis & Papar (For companies undertaking a qualifying project or activity in the designated area)	PMD – Prime Minister’s Department	SEDIA – Sabah Economic Development and Investment Authority	Manufacturing
65.	SDC Incentives in Sabah Oil & Gas Industrial Park (SOGIP) – Sipitang (For companies undertaking a qualifying project or activity in the designated area)	PMD – Prime Minister’s Department	SEDIA – Sabah Economic Development and Investment Authority	Manufacturing
66.	SDC Incentives in Sepangar Bay Manufacturing & Logistic Cluster – Sepangar (For companies undertaking a qualifying project or activity in the designated area)	PMD – Prime Minister’s Department	SEDIA – Sabah Economic Development and Investment Authority	Manufacturing
67.	SDC Incentives in Sandakan Education Hub – Sandakan (For companies undertaking a qualifying project or activity in the designated area)	PMD – Prime Minister’s Department	SEDIA – Sabah Economic Development and Investment Authority	Services

Note, these incentives usually come in the form of Pioneer status and Investment tax allowance, sometimes duty exemption and reinvestment allowance are attached too. Companies may be able to save a significant amount of money under some of these incentives.

Government policies on tax incentives change rapidly, do contact us at info@oneasia.legal to find out if you are qualified for any of the tax exemptions.

We assist our clients from various industries to develop the policies, procedures and guidelines based on the prevailing laws. We also provide advice, training and education on Compliance Framework based on the client’s nature of business and risk appetite. If you have any questions about our services, please do not hesitate to contact us.

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