Malaysia provides an eco-system which facilitates ease of doing business with
investor friendly incentives and tax policies.
Operational Headquarters (OHQ)
Eligible for income tax exemption for a period of 10 years under Section 127, Income
Tax Act 1967 for income derived from the following sources:
Income arising from services rendered by an OHQ company to its offices or related
companies outside Malaysia
Income derived from interest on foreign currency loans extended by an OHQ company
to its offices or related companies outside Malaysia
Royalties received from R&D work carried out in Malaysia by an OHQ company on
behalf of its offices or related companies outside Malaysia.
The income generated by an OHQ company in providing qualifying services to its offices
and related companies in Malaysia will not be taxed during its tax-exempt period,
provided such income does not exceed 20% of its overall income derived by providing
Foreign Exchange Administration (FEA) Flexibilities
Investment in foreign currency assets
Free to invest any amount in foreign currency assets to be funded with own foreign
currency funds OR Foreign currency borrowing.
Foreign currency borrowing
Free to borrow any amount of foreign currency from onshore banks, licensed International
Islamic Banks, other resident companies within the same corporate group in Malaysia
and from any non-residents, provided the OHQ DO NOT on-lend the
funds To other residents OR raise the funds on behalf of any resident
Free to obtain any amount of foreign currency trade financing facilities from non-resident
to finance import payments
Payment Between Resident Companies
No restriction for payment in ringgit
Other FEA Flexibilities
For more information, please visit
Other facilities accorded to an approved OHQ are as follows:
Use professional services of foreign firms, provided that such services are not
Acquire fixed assets as long as the fixed assets are used for the purpose of carrying
out the operations of the OHQ
Expatriates working in OHQ companies are taxed only on the portion of their chargeable
income attributable to the numbers of days that they are in Malaysia.
Companies applying for OHQ status can apply for expatriate posts, including key
posts. The approval will be granted according to the company's requirement.
International Procurement Centres/ Regional Distribution Centres
International Procurement Centres
An International Procurement Centre (IPC) is a locally incorporated company, which
carries on a business in Malaysia to undertake procurement and sale of raw materials,
components and finished products for its group of related companies and unrelated
companies in Malaysia and abroad. This would include procurement from, and sales
made to, local sources and third countries.
Regional Distribution Centres
A Regional Distribution Centre (RDC) is a collection and consolidation centre for
finished goods, components and spare parts produced by its own group of companies
for its own brand to be distributed to dealers, importers or its subsidiaries or
other unrelated companies within or outside the country. Among the value-added activities
involved are bulk breaking, repackaging and labelling.
A company granted IPC/RDC status and incentives under Section 127 of the Income
Tax Act 1967, is allowed 100% foreign equity ownership.
An approved IPC/RDC status company can be considered for:
Foreign Exchange Administration
(FEA) Flexibilities Accorded to Resident Companies with International Procurement
Centres (IPC) and Regional Distribution Centres (RDC) Status
Hedging of current account transactions
Free to hedge with onshore banks and licensed International Islamic Banks for payments
and receipts for import and export of goods and services, based on firm underlying
commitment; or on anticipatory basis
Hedging involving ringgit shall only be undertaken with licensed onshore banks
Payment between resident companies
Free to pay other resident companies in foreign currency for the settlement of goods
and services sourced from its foreign currency account if the IPC/RDC have exports
earnings (either from export of goods or services)
Other FEA Flexibilities: For more information please visit
Expatriate posts based on the requirements of the IPC/RDC
Bring in raw materials, components or finished products with customs duty exemption
into free industrial zones (FIZs), free commercial zones (FCZs), licensed manufacturing
warehouse (LMWs) and bonded warehouses for re-packaging, cargo consolidation and
integration before distribution to its final consumers.
Expatriates working in IPC/RDC companies are taxed only on the portion of their
chargeable income attributable to the numbers of days that they are in Malaysia.
Global Shared Services / Regional Shared Services
MSC Malaysia-Status companies, institutions or faculties may enjoy attractive financial
& non-financial incentives.
Pioneer status with 100% income tax exemption for 5+5 years
100% ITA set against 100% income tax for 5 years
Freedom to source capital and borrow funds globally
Duty-Free Importation of multimedia equipment (DFI)
No censorship of internet
Competitive telco rates
Access to talent
Access to R&D grants (subject to certain criteria)
The following grants and funds are available:
An exemption from tax on 100% statutory income:
An exemption of 100% statutory income derived from a new business or an expansion
project that is equivalent to an allowance of 100% of qualifying capital expenditure
incurred for a period of five (5) years
A BioNexus status company is entitled to a concessionary tax rate of 20% on statutory
income from qualifying activities for ten (10) years upon the expiry of the tax
Tax exemption on dividends distributed by a BioNexus status company
Exemption of import duty and sales tax on raw materials/components and machinery
Double deduction on expenditure incurred for R&D
Double deduction on expenditure incurred for the promotion of exports
Buildings used solely for the purpose of biotechnology qualifying activities will
be eligible for Industrial Building Allowance to be claimed over a period of 10
A company or an individual (that carry on business) investing in a BioNexus status
company is eligible for a tax deduction equivalent to the total investment made
in seed capital or early stage financing
Halal means allowed and permissible for consumption with relation to Syariah law
as long as they are safe and not harmful. With continued efforts to establish Malaysia
as the "Global Halal Hub", the Halal Industry Development Corporation provides the
Halal Park Operator
In an effort to promote the attractiveness of the Halal Parks, the following incentives
Full income tax exemption for a period of 10 years ; OR 100% income
tax exemption on qualifying capital expenditure within a period of 5 years;
Exemption on import duty import duty and sales tax on equipment, components and
machinery used directly in the Cold Room Operations subject to the current policies
Having met the eligibility criteria, all the application must comply with HDC Designated
Halal Parks Development Guidelines. Any new Halal Parks established by the State
Government / any other parties, seeking to be endorsed HALMAS Status must obtain
consent from HDC by complying to the set of checklist on requirement of infrastructure,
standards and guidelines.
Incentives for Halal Industry Players
In an effort to increase Malaysia's competitiveness in the Global Halal Market particularly
for inward and outward investment into the country, it is proposed that incentives
be granted to companies operating in the designated Halal Park.
Qualifying criteria for halal industry players are:
The activities must be in the following four (4) industry sectors :
The employment of high valued knowledge workers with a minimum of 15% of the total
workforce including at least three (3) Halal Compliance Officers;
Located in HDC Designated Halal Parks and Logistic Cold Hubs approved by HDC;
Must not be involved in any distribution and consultancy activities;
Must always comply with prescribed quality, hygiene and environmental guidelines;
Must always comply with all laws, regulations and licensing requirements where applicable;
Must comply with HDC’s halal integrity criteria with tests from accredited
laboratories in determining the credibility of the promoted halal products;
Must be involved in new business activities related to Halal and must incorporate
a new legal entity in Malaysia.
Incentives for Halal Logistics Operators
In an effort to promote Halal Industry and Halal supply chain in Malaysia, the incentives
are broaden up to the logistics operators. The recommended incentives are:
Services provided by Halal Logistic Operators must be integrated which comprises
of the three (3) principal activities:
And at least one of the following activities:
The Halal Logistic Operator must own minimum infrastructure as follows :
Approved Service Projects (ASP)
Research & Development (R&D)
Cold Chain Facilities & Services
Pioneer Status or Investment Tax Allowance
Single deduction on pre-operating training expenses
Deduction on capital expenditure(agricultural allowance) for approved agricultural
Double deduction incentives for research and development
Double deduction incentives for training
Double deduction for promotion of exports
Double deduction on export credit insurance premium
Tax exemption on the value of increased exports
Special tax treatment for gifts in cash
Duty exemption on machinery, equipment, raw materials & components for:
producing manufactured goods - research activity
Tax deduction for the investor company, equivalent to the amount of investment made
in a 100% owned subsidiary company engaged in food production AND income tax exemption
for 10 years for the subsidiary company engaged in food production; OR
Investor company is given group relief for the losses incurred by the subsidiary
company which is owned 100% by the investor company AND income tax exemption for
10 years for the subsidiary company engaged in food production. (application to
be submitted by 31 December 2003)
Pioneer status/Investment tax allowance for companies providing cold chain facilities
and services for perishable local food products
Single deduction on expenses incurred for obtaining quality systems and halal certification
Accelerated Capital Allowance - use of environmental protection equipment - use
of computers and information technology assets - upon expiry of reinvestment allowance
only forcompanies that reinvest in production of promoted food items
Pioneer Status/Investment Tax Allowance for carrying out promoted product/activity
forest plantation project(strategic project);
recycling of agricultural waste or agricultural by-products, chemicals and reconstituted
wood-based panel boards or products;
storing, treating and disposing of dangerous toxic and hazardous waste;
energy conservation(application to be submitted by Dec 2002)
utilising biomass (application to be submitted by Dec 2002)
Single deduction for gifts in cash
Accelerated capital allowance for environmental protection equipment
Duty exemption on machinery, equipment & materials
Pioneer Status for a period of five years to companies which develop both original
and/or undertake major modifications of existing software other than those deemed
Accelerated Capital Allowance on computers and information technology assets to
be written off within a period of 2 years;
Expenses incurred on new computer given to their employees are allowed as deductions
for income tax purposes; and
Contributions in cash and in kind of at least RM50,000 for ICT acculturation projects
in the local community are allowed as deduction for income tax purposes;
Income no tax:
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"We have decided to open a regional office in Kuala Lumpur as the
city is the launch pad to Southeast Asia.
"With an attractive ecosystem for inward investment, world-class infrastructure,
strong economic frameworks and access to the rest of the ASEAN region, Kuala Lumpur
will offer a fitting environment for Altran to continue to grow our presence in
the market across our key business areas – aviation, automotive, healthcare,
telecoms and smart society.
"As a facilitator of investments into Greater Kuala Lumpur, InvestKL
has been an excellent partner.
"Their ability to bring outside-in perspective, understanding of MNCs' constrains
and a consultative behaviour is commendable. GKL is also one of the best places
to nurture talent for innovation. With a more structured industry driven education
system, this can be enhanced.
"Kuala Lumpur is a tremendous, vibrant city. The people are very
diverse and embrace people from all walks of life.
"Kuala Lumpur is both very cosmopolitan and at the same time very warm and friendly.
There are a wide variety of cultural activities and opportunities, transportation
is good and improving, and prices are reasonable. It is a safe city and the government
is very forward thinking.
"Greater Kuala Lumpur has well established Infrastructure in terms
of logistics and IT; there is easy availability of talent for regional roles, and
availability of related service providers which are critical factors for our business.
"In addition, the ease of doing business; the simplicity of company registration,
the stable government policies (which do not change every few months) and the freedom
and ease of fund transfers are great advantages of doing business in Malaysia. InvestKL
has also been very efficient and very responsive in meeting our requirements.
"Greater Kuala Lumpur is a great place for our business; Malaysia
has investor friendly policies, attractive and competitive tax incentives, and good
"Having been in Malaysia since 1975, we have seen numerous timely reforms carried
out by the government to ease domestic regulations which allow the private sector
to continuously grow their businesses.
We rate the ease of doing business in Kuala Lumpur 8 out of 10.
"We are projecting stronger revenue growth from Asia following
our investments in Malaysia.
"Our manufacturing plant in Penang and regional financial hub in Kuala Lumpur will
play a key role in supporting our clients in Malaysia, Asia and the Middle East,
and in the expansion of our business in these key markets.
"Malaysia is also ideal for our financial hub as it offers highly qualified financial
professionals with excellent customer service attitudes. The country is open to
attracting knowledge-based activities and offers an excellent business environment,
with a Government committed to the development of education and infrastructure."
“This centre is critical to IBM’s ability to offer
our clients support at any level local, regional and global to provide the flexibility,
scalability and security our clients expect.
"We selected Malaysia for our newest facility based on the strong public-private
partnership with the country and Cyberjaya, its competitive business model, and
the talent and skills that the Malaysian people have to offer.
“The global delivery centres are a major component of IBM’s strategy
to be a globally integrated enterprise, which allows us to perform work anywhere
in the world where we have the right skills and the right environment for business
to drive profitable growth. Our new center in Cyberjaya is now a core component
of that global network. We believe it will be a model for the delivery of technology
services and just as importantly, it will be role model for a public/private partnership
that creates new opportunities for Malaysians.”
“T&D technology can be highly value–added and currently
manufacturing of complex high voltage (HV) T&D equipment is mostly done in Europe
“Toshiba Corporation has selected Malaysia as a global supply chain hub, regional
full turnkey (FTK) center and an R&D center for its T&D equipment due to
the availability of excellent technical resources and its strategic location to
address the fast growing ASEAN market for these products.
“Malaysia is one of the established T&D markets in the ASEAN region, and
established reputation of Malaysian-made products supports the manufacturing requirements
in the industry.”
"We chose Malaysia as its multi-lingual and skilled workforce is
ideal for our regional and global support services.
"Our regional center in Kuala Lumpur offers service and support for customers across
Southeast Asia. It also provides operational support for our global payment service.
"This demonstrates our commitment to offer a safer, more secure online payment platform
to millions of customers in the region, especially in Southeast Asia."
"Citibank remains committed to our customers and will continue
with our investments to grow our business in Malaysia.
"Throughout our 50 over years in Malaysia and as one of the leading foreign banks
in Malaysia, Citibank has been an active contributor and leading player in the dynamic
growth of the local banking industry.
"There are significant business opportunities in Malaysia as we look forward to
to invest in Malaysia as the economy transforms under the Economic Transformation