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Malaysia Investment Incentives

Update Date:2018-5-7 10:41:11     Views:977

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In Malaysia, tax incentives are classified as direct and indirect. The direct tax incentives grant partial or total relief from income tax payment for a specified period, while indirect tax incentives are in the form of exemptions from import duty, sales tax and excise duty.

The direct or indirect tax incentives are provided for in the Promotion of Investments Act 1986, Income Tax Act 1967, Customs Act 1967, Sales Tax Act 1972, Excise Act 1976 and Free Zones Act 1990. These Acts cover investments in the manufacturing, agriculture, tourism (including hotel) and approved services sectors as well as R&D, training and environmental protection activities.

The major tax incentives for companies investing in the services sector are the Pioneer Status and the Investment Tax Allowance.

i.Malaysia Investment Incentives Pioneer Status
A company granted Pioneer Status enjoys a five year partial exemption from the payment of income tax. It pays tax on 30% of its statutory income*, with the exemption period commencing from its Production Day (defined as the day its production level reaches 30% of its capacity).
Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company.

* Statutory Income is derived after deducting revenue expenditure and capital allowances from the gross income.

ii. Malaysia Investment Tax Allowance
As an alternative to Pioneer Status, a company may apply for Investment Tax Allowance (ITA). A company granted ITA is entitled to an allowance of 60% on its qualifying capital expenditure (factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date the first qualifying capital expenditure is incurred.

The company can offset this allowance against 70% of its statutory income for each year of assessment. Any unutilized allowance can be carried forward to subsequent years until fully utilized. The remaining 30% of its statutory income will be taxed at the prevailing company tax rate.

iii.Malaysia Investment of  Incentives for the Services Sector
• Incentives for Tourism Industry
• Incentives for Mine Wellness City Developer, Manager and Operator
• Incentives for Environmental Management
• Incentives for Research and Development
• Incentives for Medical Devices Testing Laboratories
• Incentives for Training
• Incentives for Approved Service Projects
• Incentives for Integrated Logistics Services
• Incentives for Cold Chain Facilities
• Incentives for Gas and Radiation Sterilization Services
• Incentives for Operational Headquarters
• Incentives for International Procurement Centers/Regional Distribution Centers
• Representative Offices and Regional Offices
• Incentives for Treasury Management Centre (TMC)
• Incentives for Providers of Industrial Design Services In Malaysia
• Incentives for Private and International Schools
• Other Related Incentives

For further queries, you are welcome to contact ATAHK anytime, anywhere by simply visiting ATAHK’s website, or calling at +603-21418908 or email us at


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