Standard Incentives

The following grants and funds are available:

Tax Incentives

1. An exemption from tax on 100% statutory income:

   • For a period of ten (10) consecutive years of assessment from the first year the company derived statutory income from the new business; or
     
     
   • For a period of five (5) consecutive years of assessment from the first year the company derived statutory income from the existing business and expansion project; or
     
     

2. 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

3. 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 exemption period

4. Tax exemption on dividends distributed by a BioNexus status company

5. Exemption of import duty and sales tax on raw materials/components and machinery and equipment

6. Double deduction on expenditure incurred for R&D

7. Double deduction on expenditure incurred for the promotion of exports

8. 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 years

9. 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 following incentives:

Halal Park Operator

In an effort to promote the attractiveness of the Halal Parks, the following incentives are recommended:

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:

1. The activities must be in the following four (4) industry sectors :

   • Specialty Processed Food
     
     
   • Pharmaceuticals, Cosmetics and Personal Care Products
     
     
   • Livestock and Meat Products
     
     
   • Halal Ingredients
     
     

2. The employment of high valued knowledge workers with a minimum of 15% of the total workforce including at least three (3) Halal Compliance Officers;

3. Located in HDC Designated Halal Parks and Logistic Cold Hubs approved by HDC;

4. Must not be involved in any distribution and consultancy activities;

5. Must always comply with prescribed quality, hygiene and environmental guidelines;

6. Must always comply with all laws, regulations and licensing requirements where applicable;

7. Must comply with HDC’s halal integrity criteria with tests from accredited laboratories in determining the credibility of the promoted halal products;

8. 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 :

• Pioneer Status or Investment tax Allowance
  
  
• Industrial Adjustment Allowance
  
  
• Infrastructure Allowance
  
  
• Reinvestment Allowance
  
  
• Industrial Building Allowance
  
  
• Double deduction on expenses for the promotion of exports
  
  
• Double deduction for promotion of Malaysian brand names
  
  
• Double deduction incentive for research and development
  
  
• Double deduction incentives for training
  
  
• Double deduction incentives on freight charges
  
  
• Double deduction on export credit insurance premium
  
  
• Single deduction on pre-operating training expenses
  
  
• Single deduction on expenses incurred for obtaining quality systems and halal certification and accreditation
  
  
• Tax exemption on the value of increased exports
  
  
• Accelerated Capital Allowance
  
  
  • use of environmental protection equipment
    
    
  • use of computers and information technology assets
    
    
  • upon expiry of reinvestment allowance only for companies that reinvest in promoted products
    
    
• Duty exemption on machinery, equipment, raw materials & components for:
  
  
  • producing manufactured goods
    
    
  • research activity - training activity
    
    
  • environmental protection
    
    

Approved Service Projects (ASP)

• Tax Exemption/Investment Allowance
  
  
• Industrial Building Allowance
  
  
• Duty Exemption on Machinery/Equipment & Raw Materials/Components
  
  
• Double Deduction Incentive on Promotion of Export of Services
  
  
• Double Deduction Incentive For Research & Development (Entire Services Sector)
  
  
• Double Deduction Incentive on Training (Entire Services Sector)
  
  
• Tax exemption on value of increased export
  
  
• Accelerated capital allowance for computers
  
  
• Accelerated capital allowance for environment friendly equipment
  
  

Tourism

• Pioneer Status/Investment Tax Allowance
  
  
• Infrastructure Allowance
  
  
• Double deduction incentive for research & development
  
  
• Double deduction incentives for training
  
  
• Double deduction on overseas promotion
  
  
• Double deduction on approved Trade Fairs
  
  
• Single deduction on pre-operating training expenses
  
  
• Single deduction on cultural performances
  
  
• Industrial Building Allowance
  
  
• Accelerated capital allowance for environmental friendly equipment
  
  
• Tax exemption for tour operators
  
  
• Tax exemption for promoting international conferences
  
  
• Duty exemption on selected materials & equipments for tourism companies, musical studios and
  
  
• No import and excise duty on CKD components for locally assembled tourist buses
  
  
• No sales tax on pewterware, camera, watches, lighters, fountain pens, transistor radios, perfumes and cosmetic products
  
  
• Abolishment of service tax in Labuan & Langkawi
  
  
• Deduction for international Conference Promotion
  
  
• Incentives for Domestic Tourism
  
  
• Incentives for bringing in foreign tourists
  
  
• Double deduction in approved International Trade fairs
  
  

Research & Development (R&D)

• Pioneer Status for Contract Research and Development Company.
  
  
• Investment Tax Allowance (ITA) for Research and Development Company and Contract Research and Development Company (as an alternative to PS).
  
  
• ITA for in-house research
  
  
• Double Deduction Incentive
  
  
• Industrial Building Allowance
  
  
• Accelerated Capital Allowance for computers - use of environmental protection equipment - use of computer and information technology assets
  
  
• Special Tax Treatment for Gifts
  
  
• Duty Exemption on Machinery & Materials
  
  

Training

• Investment Tax Allowance for new & existing Technical or vocational Training Company.
  
  
• Double Deduction Incentive for training expenses for SMI
  
  
• Single deduction for gift in cash
  
  
• Industrial Building Allowance
  
  
• Accelerated Capital Allowance for computers - use of computer and IT assets
  
  
• Special Tax Treatment for Gifts
  
  
• Duty Exemption on Machinery & Materials
  
  

Cold Chain Facilities & Services

• Pioneer status /Investment Tax Allowance
  
  

• Pioneer Status or Investment Tax Allowance

• Infrastructure allowance

• Reinvestment allowance

• Single deduction on pre-operating training expenses

• Deduction on capital expenditure(agricultural allowance) for approved agricultural projects

• 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

  • training activity

  • environment protection

• 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 and accreditation

• 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 such as:

  • 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)

• Infrastructure allowance

• Single deduction for gifts in cash

• Accelerated capital allowance for environmental protection equipment

• Duty exemption on machinery, equipment & materials

• Companies with MSC status are entitled for 10 years tax exemption or 100% investment tax allowance for a period of 5 years. All multimedia equipment are exempted from import duty and sales tax. Besides, this the company also enjoys other incentives and benefits backed by the Malaysian Government's Bill of Guarantees as follows:
  
  
  • Provide a world-class physical and information infrastructure;
    
    
  • Allow unrestricted employment knowledge workers from overseas;
    
    
  • Ensure freedom of ownership of companies;
    
    
  • Allow freedom of sourcing capital globally for MSC infrastructure and freedom of borrowing funds globally;
    
    
  • Become a regional leader in intellectual property protection and cyberlaws;
    
    
  • Ensure no censorship of the internet;
    
    
  • Provide globally competitive telecommunication tariffs;
    
    
  • Tender key MSC infrastructure contracts to leading companies willing to use the MSC as their regional hub; and
    
    
  • Provide a high-powered implementation agency to act as an effective one -stop super shop .

• 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 established;

• 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;

• Whereas, the incentives provided to individuals are as follows:
  
  
  • Tax rebate of RM400 for the purchase of a computer for the family which is allowed once in 5 years;
    
    
  • A tax relief on study fees up to a maximum of RM5,000 per year for pursuing further studies including ICT's courses at local higher learning institutions;
    
    
  • A tax relief of up to RM500 per year to individual tax payers for the purchase of books, including texts book;
    
    
  • Gifts of new computers by companies to their employees are not treated as benefit in kind and thereby not subjected to income tax;
    
    
  • 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;
    
    
  • Computer loan for government employees once in 5 years; and
    
    
  • EPF contributors are allowed to withdraw their contributions to purchase a computer.
    
    

    1. Investment Overseas

    2. Income no tax:

• Single deduction on pre-operating expenses for approved investment overseas.

• Offshore companies in Labuan undertaking offshore business can elect to pay tax at a rate of 3% from net profit; or pay RM20,000.
  
  
• Income of offshore companies from non-trading activities is not subjected to any taxes
  
  
• Management and technical fees, interest and royalty paid by offshore companies to non-residents or to other offshore companies are exempted from withholding tax.
  
  
• Dividend received by or from offshore companies is not subjected to income tax except for dividend received from companies undertaking offshore business activities.
  
  
• All documents relating to business of offshore companies are not subjected to stamp duty.
  
  
• Non citizen working in Labuan in the field of management who are engaged by offshore companies are exempted from income tax on 50% of their gross income up to the year of assessment 2004.
  
  
• Trust company is exempted from income tax on 65% of the statutory income for qualifying services to an offshore company from YA 2000(current year) to YA 2004.