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Malaysia Halal Park Opportunities

Malaysia Halal Park Opportunities

Malaysia Halal Park Opportunities

Income tax exemption for 10 years or 100% income tax exemption on capital expenditure for 5 years for all companies operating in Malaysia Halal Park.
In a bid to make Malaysia a strong competitor in the Global Halal Market, all companies that operate within the scope of the market will be given a complete exemption from income tax for a duration of 10 years or 100% income tax exemption on capital expenditure for a duration of 5 years plus an exemption on import duty on plant & equipment and raw materials and double deduction on specific expenses.

HALMAS

HALMAS, it is a symbol of excellence reserved for parks that perform remarkably in terms of the standard of Halal products that they produce, their level of integrity as well as safety.

Several perks, in the form of incentives are tied to this mark of notable performance. Operators, industry players and logistics service providers will enjoy these benefits, to serve as a motivating factor for new and existing players in the Halal industry.

HALAL INCENTIVES

1. Halal Park Operators

In a bid to enhance the quality of Halal parks and make them more fascinating, certain incentives are recommended, they include:

  1. Total exemption from income tax for a duration of 10 years, or 100% income tax exemption on capital expenditure for a duration of 5 years.
  2. Exclusion from payments that pertain to import duties on equipment, components, and machinery that are utilized in the Cold Room Operations in compliance with existing policies. 

2. Halal Industry Players (Manufacturers)

In a bid to reinforce the competitive prowess of Malaysia in the Global Halal Market, specifically in aspects of inward and outward investment into the country, it is suggested that certain incentives be provided for companies that operate within the Halal Park.
  1. Total exemption from income tax for a duration of 10 years, or 100% income tax exemption on capital expenditure for a duration of 5 years.
  2. Exclusion from payments that pertain to import duties on raw materials that are utilized for the development and production of halal promoted products.
  3. Double deduction on expenses that results from obtaining international quality standards including HACCP, GMP, Codex Alimentarius (food standard guidelines of FAO & WHO), Sanitation Standard Operating Procedure and regulations for compliance for export markets such as Food Traceability from farm to fork.

3. Halal Logistic Service Providers

In a bid to improve Halal Industry and Halal supply chain in Malaysia, recommended incentives that also covers logistic operators include:
  1. Total exemption from income tax for a duration of 5 years, or 100% income tax exemption on capital expenditure for a duration of 5 years.
  2. Exclusion from payments that pertain to import duties on equipment, components, and machinery that are utilized in the Cold Room Operations in compliance with existing policies.

HALMAS ELIGIBILITY CRITERIA

The following qualifications are required from applicants, they must be;
  1. Have an active part in the Halal industry
    • Food & Beverages
    • Cosmetics & Personal Care
    • Halal Ingredients
    • Pharmaceutical
    • Modest Fashion
    • Medical Tourism
    • Medical Devices & Appliances
    • Muslim Friendly Hospitality
    • Logistics Services
    • Islamic Finances
    • Vaccine
  2. High value knowledge workers with at least 15% of the entire workforce, with a minimum of 2 Halal Compliance Officers inclusive.
  3. Currently taking part in recent business activities pertaining to Halal, which must comprise of a new legal entity in Malaysia.
  4. Property within the bounds of the specified area.

LIST OF 14 HALMAS – ACCREDITED HALAL PARKS

List of halal parks with HALMAS status:-
  1. PERDA Halal Park PERDA
  2. Penang International Halal Park
  3. Selangor Halal Hub
  4. PKFZ National Halal Park PFKZ
  5. Techpark @ Enstek
  6. Pedas Halal Park
  7. Melaka Halal Park
  8. Pasir Mas Halal Park
  9. Gambang Halal Park
  10. Sedenak Industrial Park
  11. ECER Pasir Mas Halal Park
  12. ECER Gambang Halal Park
  13. POIC Tanjung Langsat
  14. Iskandar Business Park

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Featured Ideas & Insights Publications Tax

Investing In The Northern Corridor Economic Region (NCER), Malaysia

Investing In The NCER

Investing In The Northern Corridor Economic Region (NCER), MALAYSIA

The Northern Corridor Economic Region (NCER) is a development plan encompassing the four Northern States of Malaysia namely Perlis, Kedah, Perak and Penang. The priority sectors in NCER are manufacturing, agriculture and bio-industries and services which include the sub-sectors of tourism, global business services and logistics & connectivity.

MAJOR DEVELOPMENT IN NCER

Major Development in NCER

The Northern Corridor Economic Region (NCER) is a development plan encompassing the four Northern States of Malaysia namely Perlis, Kedah, Perak and Penang. The priority sectors in NCER are manufacturing, agriculture and bio-industries and services which include the sub-sectors of tourism, global business services and logistics & connectivity.

The objectives of the NCER initiative include:

a) To stimulate economic growth to address the imbalances and increase inclusively;

b) To achieve balance growth in the manufacturing, agriculture, bio-industries and services sectors;

c) To enhance talents to meet the growing needs of the region;

d) Increase private sector investments and finance initiatives.

The advantages include:

a) Located within the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT);

b) NCER has hosted many multinational companies and local companies with approximately RM47.7 billion of investment in the year 2009 – 2016;

c) Year 2020, RM50 million for high impact strategic projects has been allocated to Chuping Valley Industrial Area in Perlis;

d) NCER plays a predominant role in agriculture in the NCER;

e) NCER is renowned for its rich natural and heritage attraction.

MAJOR PROJECTS DEVELOPMENT IN NCER

Perlis Inland Port

Perlis Inland Port

An inland port to capitalize on the border trade from southern Thailand.

  • RM0.94bil GNI per year by 2025
  • 4,056 job creation
Chuping Valley Industrial Area(CVIA)

Chuping Valley Industrial Area (CVIA)

An on-going industrial park development to transform Perlis into an industrialised state.

  • RM4.5 bil investment by 2025
  • 12,674  job creation
Kota Perdana SBEZ(KPSBEZ)

Kota Perdana SBEZ(KPSBEZ)

A mixed development comprising industrial park, logistics hub & commercial zones.

  • RM50bil total GDVby 2030
  • 21,050 job creation
Kedah Science & Technology Park (KSTP)

Kedah Science & Technology Park (KSTP)

A new industrial park that focuses on science and technology clusters located at the border region.

  • RM12.9bil total GDV by 2030
  • 23,244 job creation
Kedah Rubber City (KRC)

Kedah Rubber City (KRC)

Project that will focus on downstream rubber activities by creating a complete rubber.

  • RM9.7bil investment by 2030
  • 14,471 job creation

MAIN ELIGIBILITY CRITERIA FOR NCER TAX INCENTIVE PACKAGES

a) A company incorporated in Malaysia under the Companies Act 1965 or Company Act 2016;

b) The company must be undertaking a qualifying project or activity in NCER;

c) For Foreign Direct Investment (FDI), the company must submit its application to Northern Corridor Implementation Authority (NCIA) before commencing operation/production (including trial production);

d) For Domestic Direct Investment (DDI), the incentive application submitted to NCER must not more than twelve (12) months from production services of the proposed project. The company must be owned by 60% Malaysian Resident and must hold equity in 5 years within the incentive period;

e) Company is required to source minimum 50% of raw material/ components/ services produced in Malaysia. Employment of full time employee in compliance with current national policy;

f) Applicable to application received by NCIA from 17 August 2017 until 31 December 2025.

TAX INCENTIVES IN NCER

Sector
Promoted Activities
NCER Incentives

A. Manufacturing

1. Electrical & Electronic
2. Machinery & Equipment

a. Green Technology (product)

b. Medical Devices (products)

c. Automotive (products)

d.  Additive Manufacturing (products)

e. Aerospace (products)

Kedah & Perlis

1. Income tax exemption of 100% of statutory income for 10 years (5 + 5); OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

3. A 50% reduction of stamp duty on instruments of transfer or lease of land.
Perak & Penang

4. Income tax exemption of 70% of statutory income for 10 years (5 + 5); OR

5. An allowance of 70% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

B. Agriculture & Bio-Industries

a. Sustainable Agriculture

b. Processing of Agriculture Produce

c. Superfruit/ Superfood (Upstream)

d. Superfruit/ Superfood (Downstream)

e. Green Technology Services

f. Halal Industry Seed Research & Development

Kedah, Perlis, Perak & Penang

1. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.

2. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components not produced locally and used directly in production activities.
C. Service

1. Tourism
2. Logistic
1. Tourism:
a. Medical Tourism
b. Hotel Business
c. Tourism Projects
d. Business Tourism

2. Logistics:
a. Warehousing
b. Freight Forwarding
c. Transportation
Kedah and Perlis only

1. Income tax exemption of 100% of statutory income for 10 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years; AND

3. A 50% reduction of stamp duty on instruments of transfer or lease of land.
Perak and Penang Only

1. Income tax exemption of 70% of statutory income for 10 years (5+5); OR

2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.

3. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components not produced locally and used directly in production activities for Kedah, Perak, Perlis and Penang.

D. Medical Science and Science & Technology

Contract R&D
Research, development and inspection works for customers.
Kedah and Perlis only

1. Income tax exemption of 100% of statutory income for 10 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
Perak and Penang only

1. Income tax exemption of 70% of statutory income  for 10 years (5 + 5); OR

2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.

In-House R&D
Research & development undertaken by Malaysian company for their own business.

Kedah, Perak, Perlis and Penang

1. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

2. Unutilised allowances are allowed to be carried forward to the following year until fully utilised.

R&D Company
Research on science or  technology including Industry 4.0 for the production/ improvement of materials, equipment, products or processes.

Kedah, Perak, Perlis and Penang

1. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

2. Unutilised allowances are allowed to be carried forward to the following year until fully utilised.
E. Agriculture

Seed R&D Centre
Investor

Kedah and Perlis only

1. Income tax exemption of 100% of statutory income for 10 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
Perak and Penang only

1. Income tax exemption of 70% of statutory income  for 10 years (5 + 5); OR

2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.

Seed R&D Centre
Operator

Kedah and Perlis only

1. Income tax exemption of 100% of statutory income for 10 years (5 + 5); OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.

3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.

4. Industrial Building Allowance for 10 years on building used for Seeds R&D Centre operating in Kedah Science & Technology Park (KSTP).

5. Tax deduction for 5 years on cost incurred to acquire property rights with condition that the Seed R&D Centre is at least 51% Malaysian owned.

Approved Agriculture Project

Kedah, Perlis, Perak and Penang

1. Income tax exemption of 100% of statutory income for 10 years on new project undertaken; OR

2. Income tax exemption of 100% of statutory income for 5 years on expansion project approved by Jawatankuasa Penilaian Insentif Sektor Pertanian (JPISP).

3. Tax deduction for investor company carrying on an Approved Agriculture Project by JPISP.
F. Support Industry

Education

a. Private Institution of Higher Learning

b. Technical & Vocational Education and Training (TVET)

c. International/ Private Schools

Kedah and Perlis only

1. Income tax exemption of 70% of statutory income for a period of limited 5 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 70% of the statutory income.

3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.
G. Special Incentive
1. Selama
2. Perak Tengah
3. Kuala Kangsar
4. Badan Datuk
5. Seberang Prai Utara
6. Seberang Prai Selatan
7. Seberang Prai Tengah
8. Barat Daya Pulau Pinang
Perak and Penang only

1. Income tax exemption of 100% of statutory income for a period of 15 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within certain period, will be set-off against up to 70% of the statutory income.
H. Kedah Science & Technology Park (KSTP)

1. KSTP Park Manager

Income tax exemption of 100% of statutory income for 5 years. This approval applies only to the first industrial park manager at KSTP.
2. R&D & Manufacturing activities (Operators)

a. Manufacturing activities in agro-science;
b. Advanced material
c. Information & Communication Technology;
d. Biotechnology;
e. Component R & D;
f. Halal science;
g. Green Technology
1. Income tax exemption of 100% of statutory income for 15 years (5+5+5); OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years (5+5). This allowance will be set-off against up to 70% of the statutory income.

3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.

4. A 50% stamp duty reduction on transfer or lease of land/building.

5. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components which are not produced locally and used directly in production activities.

6. This approval is subject to product/service provision from qualifying activity. This approval does not apply to income derived from intellectual property services.
3. Developer
Commercial property development only
Income tax exemption of 70% of statutory income for 5 years.

4. KSTP Global Research Centre (GRC)

Income tax exemption of 100% of statutory income for 15 years (5+5+5).

5. Education
a. IHL and TVET
1. Income tax exemption of 100% of statutory income for 5 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
I. Chuping Valley Industrial Area (CVIA)
1. Developer
Commercial property development only

1. Income tax exemption of 70% of statutory income for 5 years for the following income:

a. Disposal of all or part of right or land/building located at CVIA; OR

b. Rental of all or part or the land/buildings located at CVIA.

 

2. Stamp duty exemption on transfer or lease of land only.

2. CVIA Park Manager

Income tax exemption of 100% of statutory income for 5 years.

3. Waste-To-Resources Facilities Provider

1. Income tax exemption of 100% of statutory income for 15 years; OR

2. An allowance of 100% allowance on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income. Unutilised allowances are allowed to be carried forward to the following years until fully utilized.

3. A 50% stamp duty reduction on transfer or lease of land/ building.

4. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components which are not produced locally and used directly in production activities.
4. Education

a. Institution of Higher Learning (IHL); and
b. Technical and Vocational Education and Training (TVET).
1. Income tax exemption of 100% of statutory income for 5 years; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 70% of the statutory income. Unutilised allowances are allowed to be carried forward to the following years until fully utilized.
5. Companies That Undertake Qualifying Activities (Operators)

a. Green Manufacturing;
b. Halal industry;
c. Machinery and equipment;
d. Specialised machinery and equipment;
e. Green Energy Generation
1. Income tax exemption of 100% of statutory income for 15 years (5+5+5); OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years (5+5). This allowance will be set-off against up to 70% of the statutory income.Unutilisedallowances are allowed to be carried forward to the following years until fully utilized.

3. A 50% stamp duty reduction on transfer or lease of land/ building.
J. Kedah Rubber City (KRC)

1.  Manufacturer

1. Income tax exemption of 100% of statutory income derived from Rubber City qualifying activities for 10 years commencing from first year the company generates statutory income; AND

2. Income tax reduction of 50% for 5 years after expiry of the first 10 years; OR

3. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be offset against up to 100% of statutory income for each assessment year.

4. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.

5. Tax deduction for pre-operating expenses incurred within 4 years before the commencement date of qualifying activity and such expenses shall be deemed to be incurred on the commencement date.

3. Main Developer and Residential and Commercial Developer

1. Income tax exemption of 100% of statutory income derived from Rubber City qualifying activities for 10 years commencing from first year the company generates statutory income; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be offset against up to 100% of statutory income for each assessment year.

3. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.
4. Catalytic Anchor Tenants
1. Income tax exemption of 100% of statutory income derived from Rubber City qualifying activities for 10 years of commencing from first year the company generates statutory income; OR

2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 100% of the statutory income for each assessment year.

3. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.

4. Tax deduction for pre-operating expenses incurred within 4 years before the commencement date of qualifying activity and such expenses shall be deemed to be incurred on the commencement date.

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Investing In The East Coast Economic Region (ECER), Malaysia

Investing In The ECER

Investing In The East Coast Economic Region (ECER), MALAYSIA

East Coast Economic Region Malaysia (ECER) as the Gateway to the Asia Pacific Region offers competitive incentives such income tax exemption of 100% for 10 years, stamp duty exemption on land or building purchased for development, customised incentives and also non-fiscal incentives to approved companies.

QUICK FACTS: ECER MALAYSIA

The East Coast Economic Region (ECER) is an economic corridor established to bring about the socio-economic transformation of the east coast of Peninsular Malaysia. The ECER is Malaysia’s gateway to the ASEAN region and the Far East.

ECER covers the states of Kelantan, Terengganu, Pahang and the district of Mersing in Johor. The  advantages include:-

  • Strong support from Federal and State Governments with pro-business and liberal investment policies;
  • Advantageous geographical orientation Eastern Gateway of Malaysia to Europe, US and Asia Pacific;
  • Strong resources endowment – crude oil, natural gas, tin, timber, palm oil, rubber and others;
  • Competitive land prices;
  • Industrial park ready with infrastructure;
  • Market-oriented economy – exporter of resource based and manufacturing products;
  • Multilingual workforce speaking two or three languages, including English and Mandarin;
  • Large and established foreign business communities in all business sectors;
  • Special incentives and facilitation fund for human capital development for investors in ECER;
  • ECER Development Council is the one-stop facilitation centre to assist investors in dealing with Malaysia Government for their investment in ECER;
  • Competitive wage rates compared to the more developed regions of Malaysia.

MAIN ELIGIBILITY CRITERIA FOR ALL THE CLUSTERS:

  1. Company incorporated under the Companies Act 1965 or Company Act 2016 and resident in Malaysia;
  2. Undertaking a qualifying activity in ECER or has commence a qualifying activity not more than one (1) year from the date of application made and approval by the Minister;
  3. Investors investing in a related company shall own at least 70% equity/paid-up ordinary shares of the company; and
  4. Application to be made on or after 13 June 2008 but not later than 31 December 2020. 

ECER INCENTIVE PACKAGE FOR MANUFACTURING CLUSTER

Promoted Activity

ECER Incentives

  1. Selected manufactured and agro-based products.
  2. Selected manufacturing related services.
  1. Tax Exemption:
    • Income tax exemption of 100% for 10 years commencing from the year company derives statutory income; or
    • Income tax exemption equivalent to 100% of qualifying capital expenditure (Investment tax allowance) for 5 years.
  2. Stamp duty exemption on land or building acquired for development.

ECER INCENTIVE PACKAGE FOR TOURISM CLUSTER

Promoted Activity

ECER Incentives

Tourism

 

  1. Culture and Heritage.
  2. Island tourism.
  3. Mainland coastal tourism.
  4. Cross border tourism.
  5. Eco-tourism.
  6. Health tourism.
  1. Tax exemption:
    • Income tax exemption of 100% for 10 years commencing from the year company derives statutory income; or
    • Income tax exemption equivalent to 100% of qualifying capital expenditure (Investment tax allowance) for 5 years.
  2. Stamp duty exemption on land or building acquired for development.
  3. Withholding tax exemption on royalty and technical fees up to 31 December 2020 for tourism sector only.
  4. Single deduction up to maximum of RM1million for a year of assessment for sponsors of such Hallmark Event approved by ECER Development Council.

ECER INCENTIVE PACKAGE FOR CULTURE & HERITAGE

Promoted Activity

ECER Incentives

Culture and Heritage

 

  1. Making of batik, songket or royal tenun.
  2. Making of brassware or silverware.
  3. Making of traditional kites.
  4. Woodcarving.
  5. Selected art and craft projects including print-making or sculpting.
  1. Tax exemption
    • Income tax exemption of 100% for 10 years commencing from the year company derives statutory income; or
    • Income tax exemption equivalent to 100% of qualifying capital expenditure (Investment tax allowance) for 5 years;
    • Stamp duty exemption on land or building acquired for development.
    • Withholding tax exemption on royalty and technical fees up to 31 December 2020 for tourism sector only.
    • Single deduction up to maximum of RM1million for a year of assessment for sponsors of such Hallmark Event approved by ECERDC.

ECER INCENTIVE PACKAGE FOR AGRICULTURE AND AGRICULTURE RELATED SERVICES CLUSTER

Promoted Activity

ECER Incentives

Agriculture

 

  1. Cultivation of kenaf, vegetable, fruit, herbs, spices or cocoa.
  2. Biomass Plantation including cassava, acacia mangium, leucana leucocephala.
  3. Planting of Hevea brasiliensis.
  4. Floriculture including ornamental flowers.
  5. Aquaculture.
  6. Inland and Deep sea fishing.
  7. Rearing of cattle, buffalo, goat, sheep, ostrich, turkey and quail.
  1. Tax exemption:
    • Income tax exemption of 100% for 10 years commencing from the year company derives statutory income; or
    • Income tax exemption equivalent to 100% of qualifying capital expenditure (Investment tax allowance) for 5 years.
  2. Stamp duty exemption on land or building acquired for development.
  3. Deduction to the amount of investment made in the promoted project or activity.

ECER INCENTIVE PACKAGE FOR AGRICULTURE AND AGRICULTURE RELATED SERVICES CLUSTER

Promoted Activity

ECER Incentives

Agriculture – related services

 

  1. Collecting, processing and packaging of agricultural produce.
  2. Collection and marketing of agricultural produce.
  1. Tax exemption:
    • Income tax exemption of 100% for 10 years commencing from the year company derives statutory income; or
    • Income tax exemption equivalent to 100% of qualifying capital expenditure (Investment tax allowance) for 5 years.
  2. Stamp duty exemption on land or building acquired for development.
  3. Deduction to the amount of investment made in the promoted project or activity.

ECER INCENTIVE PACKAGE FOR KNOWLEDGE, EDUCATION AND ICT DEVELOPMENT CLUSTER

Promoted Activity

ECER Incentives

  1. Education and training.
  2. Information, communication and technology.
  1. Tax exemption:
    • Income tax exemption of 100% for 10 years commencing from the year company derives statutory income; or
    • Income tax exemption equivalent to 100% of qualifying capital expenditure (Investment tax allowance) for 5 years.
    • Stamp duty exemption on land or building acquired for development.
    • Withholding tax exemption on royalty and technical fees up to 31 December 2020.

ECER INCENTIVE PACKAGE FOR OIL, GAS AND PETROCHEMICAL CLUSTER

Promoted Activity

ECER Incentives

Selected oil, gas and petrochemical products or activities.
  1. Tax exemption:
    • Income tax exemption of 100% for 10 years commencing from the year company derives statutory income; or
    • Income tax exemption equivalent to 100% of qualifying capital expenditure (Investment tax allowance) for 5 years.
  2. Stamp duty exemption on land or building acquired for development.

ECER INCENTIVE PACKAGE FOR OIL, GAS AND PETROCHEMICAL CLUSTER

Promoted Activity

ECER Incentives

1. Approved developers undertaking development in industrial parks or fee zone.

Income tax exemption for 10 years commencing from the year company derives statutory income:-

  • disposal of any right over any land or disposal of a building or rights over a building or part of a building; or
  • rental of building or part of a building.

2. Approved development manager providing management, supervisory or marketing services in relation to the development of an industrial park or free zone.

 

3. Approved park managers providing park management services including maintenance, marketing and rental of common facilities and utilities services in the industrial park or free zone.

Income tax exemption for 10 years commencing from the year company derives statutory income derived from a qualifying activity.

4. Qualifying person who sponsors a hallmark event.

A deduction equivalent to the amount not exceeding RM1 million for each year of assessment in respect of cash contribution or contribution-in-kind.

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Investing in Iskandar Malaysia

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Investing in Iskandar Malaysia

Iskandar Malaysia is set to locate in Johor, southern gateway to Peninsular Malaysia. Full tax exemption on the statutory income or double tax deduction on investment activities are up to a maximum of 10 years.

QUICK FACTS: ISKANDAR MALAYSIA

Iskandar Malaysia has been allocated RM6.83 billion by the Malaysia Government and is set to locate in Johor, the southern gateway to Peninsular Malaysia, its advantages include:

 

  • Six (6) to eight (8) hours flight radius from Asia’s burgeoning growth centres such as Bangalore, Dubai, Hong Kong, Seoul, Shanghai, Taipei and Tokyo.
  • Within reach of a global market of some 800 million people.
  • Accessible by air, land, rail and sea.
  • Flanked by three major ports, the Pasir Gudang Port, Port of Tanjung Pelepas and Tanjung Langsat Port.

 

Five Flagship Zones have been designated as key focal points for development in Iskandar Malaysia. These flagship zones have been envisaged to both further strengthen existing economic clusters as well as diversify and develop targeted growth sectors. Refer to Appendix for more details.

TAX INCENTIVES for Promoted Activities in Iskandar Malaysia:

  1. 100% Tax Exemption up to a maximum of 10 Years on the statutory income ;
  2. 200% Tax Deduction up to a maximum of 10 Years on the investment activities

1. Incentives through the Malaysian Industrial Development Authority (‘MIDA’)

Companies which are carrying out the following promoted activities and/or producing promoted products will be eligible for the following tax incentives provided under the Promotion of Investments Act, 1986 and/or the Income Tax Act, 1967.

Economic Drivers
Incentives
  1. Electrical and Electronics
  2. Petrochemicals and oleochemicals
  3. Food and Agro-processing
  4. Biotechnology

General

Pioneer Status

-5 years Pioneer Status and tax exemption at 70% of statutory income

 

Investment Tax Allowance

-60% ITA on qualifying capital expenditure incurred within 5 years and can be set off against 70% of statutory income

 

High Technology Projects

Pioneer Status

-5 years Pioneer Status and tax exemption at 100% of statutory income

 

Investment Tax Allowance

-60% ITA for 5 years and can be set off against 100% of statutory income

 

Strategic/ Prepackaged incentive Projects

Pioneer Status

-10 years Pioneer Status and tax exemption at 100% of statutory income

 

Investment Tax Allowance

-100% ITA for 5 – 10 years and can be set off against 100% of statutory income

 

  1. Exemption on import duty and/or sales tax on plant and equipment directly used in the manufacturing process
  2. Exemption from import duty and/or sales tax on raw materials and components used in the manufacturing process

Logistics

 

  1. Integrated logistic services providers (‘ILS’)
  2. International procurement centres (‘IPCs’)/ regional distribution centres (‘RDCs’)
  1. 5 years Pioneer Status and tax exemption at 70% of statutory income, or
  2. 60% ITA for 5 years and can be set off against 70% of statutory income
  3. For IPCs and RDCs, full tax exemption for 10 years

Tourism

 

  1. Establishment of hotels (up to 3 stars)
  2. Expansion/modernization of existing hotels
  3. Establishment and expansion of tourist projects
  4. Establishment of recreational camps
  5. Establishment of convention centres
  1. 5 years Pioneer Status and tax exemption at 70% of statutory income, or
  2. 60% ITA for 5 years and can be set off against 70% of statutory income
  3. Exemption from import duty and/or sales tax on selected equipment used in the hotel/tourism industry

Education

 

  1. Technical or vocational training
  2. Private Higher Education Institutions (‘PHEIs”) providing selected courses in Science (new set up) or existing PHEIs in the selected fields of Science undertaking additional investments for upgrading or expansion capacity
  1. 100% ITA on qualifying capital expenditure incurred within 10 years to be set off against 70% of statutory income
  2. Special building allowance of 10% per year
  3. Exemption on import duty and/or sales tax on educational equipment including laboratory equipment
  4. Exemption on withholding tax on royalties paid to non-resident franchisors
  5. Incentives for Private Higher Education Institutions (‘PHEIs) providing courses relating to multimedia and which have their own multimedia faculties are also available through MDeC.

Creative Industries

 

  1. Film and video production
  1. 5 years Pioneer Status and tax exemption at 70% of statutory income, or
  2. 60% ITA for 5 years and can be set off against 70% of statutory income
  3. For other incentives, please refer to incentives provided through MDeC for multimedia development and applications.

Financial services, advisory services and consulting services

 

  1. Provision of regional headquarters services under business process outsourcing/ offshoring
  1. 10 years tax exemption on the provision of regional headquarters services to related companies including certain types of business process outsourcing/ offshoring
  2. See part IV below for incentives for selected services under Islamic Financial Services

2. Incentives through the Multimedia Development Corporation (‘MDEC’)

Companies that develop or use multimedia technologies to produce or enhance their products and services are eligible for MSC Malaysia Status. These also include private higher educational institutions providing courses relating to IT.

 

A company seeking MSC Malaysia status must meet the following criteria:

 

  • Be a provider or heavy user of multimedia products and services;
  • Employ a substantial number of knowledgeable workers;
  • Provide technology transfer and/or contribute towards the development of MSC Malaysia or support Malaysia’s k-economy initiatives;
  • Establish a separate legal entity for MSC Malaysia qualifying multimedia business and activities;
  • Locate in a MSC Malaysia designated cybercity/cybercentre*;
  • Comply with environmental guidelines

(*Menara MSC Cyberport, a building located within Iskandar Malaysia, is a designated cybercentre)

 

Economic Drivers

Education

  • -Private Higher Education Institutions (‘PHEIs”) providing courses related to IT and which have their own multimedia faculties

 

Creative Industries

May include:

  • Film and television (pre and post production, production)
  • Games and animation (content creation, production, post-production)
  • Online and mobile content generation
  • Online and mobile content aggregation and enablers

 

Financial services, advisory services and consulting services

  • Business process outsourcing/offshoring

 

Incentives

  • 5 years Pioneer Status (extendable by another 5 years) and tax exemption at 100% of statutory income; or
  • 100% ITA on qualifying capital expenditure incurred within 5 years to be set off against 100% of statutory income.
  • Exemption on import duty and/or sales tax on multimedia equipment used in the MSC operations.
  • Exemption on withholding tax on payments to non-residents for technical services, licensing fees and interest on loans for technology development.
  • Owners of buildings in Cyberjaya whose buildings are rented out to MSC status companies are eligible for Industrial Building Allowance of 10% to be claimed over a period of ten years.

3. Incentives through the Ministry of Agriculture

Projects in selected food production are eligible for a better form of tax incentives. The eligible ‘food products’ as approved by the Minister of Finance include vegetables, fruits, herbs, spices, aquaculture, rearing of cattle, goats and sheep and deep sea fishing. The incentives are for the company undertaking the approved food production activity as well as for the company investing in the approved food production company.

 

Economic Drivers

  • Food and agro-processing

 

Incentives

  • Approved Food Production company

    – 100% tax exemption on statutory income for 10 years

  • Company which invests in Approved Food Production company

    • The investor company is entitled to a tax deduction equivalent to the amount invested in the subsidiary (must be at least 70% owned) which undertakes the food production project; or
    • The investor company will be given group relief for the losses incurred by the subsidiary company
    • Exemption on import duty and/or sales tax on plant and equipment directly used in the operations

4. Incentives through the Malaysia Islamic Financial Centre (‘MIFC’)

General banking and financial services providers are not eligible for any tax incentive in Malaysia. To promote Malaysia as an Islamic Financial Centre (MIFC), tax incentives are available for eligible companies carrying out Islamic banking services, takaful operations, stock broking, fund management services and etc. The incentives for Islamic financial services include the following:

 

  • tax exemption for Islamic Financial Institutions on transactions in international currencies
  • tax exemption for Special Purpose Vehicles issuing Islamic securities
  • tax deduction for expenditure on the issuance of Islamic securities
  • tax exemption for Islamic fund management companies
  • tax deduction for the establishment of an Islamic stockbroking firm
  • tax exemption on income received by non-resident experts in Islamic finance

5. Incentives through the Malaysian Biotechnology Corporation

A company which is a provider of a product or services based on life sciences or substantially utilize biotechnology processes and with research capabilities in specific focus areas is eligible to apply for a BioNexus status. The application for BioNexus status is to be submitted to the Malaysian Biotechnology Corporation (Biotech Corp). The incentives are:

 

  • 100% income tax exemption for ten years commencing from the first year the company derives profits; or
  • Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within a period of five years.
  • Upon the expiry of the tax exemption period, a BioNexus status company will be given a concessionary tax rate of 20% for ten years on income from qualifying activities.
  • A company which invests in its subsidiary (at least 70%), which is a BioNexus Status company is granted tax deduction equivalent to the amount of investment made in that subsidiary;
  • A company or individual investing in a BioNexus status company is given a tax deduction equivalent to the total investment made in seed capital and early stage financing;
  • Exemption of import duty and sales tax on raw materials/components and machinery and equipment;
  • Double deduction on expenditure incurred for R&D;
  • Double deduction on expenditure incurred for the promotion of exports; and
  • Buildings used for biotechnology activities will be eligible for Industrial Building Allowance to be claimed over a period of 10 years.

6. Incentives through the Halal Industry Development Corporation (HDC)

Halal is a way of life and promotes a healthy lifestyle by how we eat, live and conduct our business. HDC Malaysia has been tasked to develop and promote Malaysia as a ‘Global Halal Hub’ through standards development, branding enhancement as well as commercial and industry development.

 

The following incentives are available for the different type of activities within the supply chain to bring halal certified products to the market.

Activities
Incentives
Halal Park Operator
Development of halal parks
  1. 10 years tax exemption on the provision of regional headquarters services to related companies including certain types of business process outsourcing/ offshoring
  2. See part IV below for incentives for selected services under Islamic Financial Services
Halal Logistic Operator
Services provided must be integrated similar to services provided by an “integrated logistic services provider” which had been approved with tax incentives
  1. 5 years Pioneer Status with tax exemption at 100% of statutory income; or
  2. 100% ITA on qualifying capital expenditure incurred within 5 years to be set off against 100% of statutory income
  3. Exemption from import duty on equipment directly used in the Cold Room Operations
Halal Park Operator
Development of halal parks
  1. Exemption on statutory income from export sales for 5 years; or
  2. 100% ITA on qualifying capital expenditure incurred within 10 years to be set off against 100% of statutory income
  3. Exemption from import duty on raw materials used for the development and production of halal promoted products
  4. Double deduction on expenses incurred in obtaining international quality standards such as HACCP, GMP, Codex Allimentarious (food standard guidelines of FAO and WHO) , Sanitation Standard Operating Procedures and regulations for compliance for export markets such as Food and Traceability from farm to fork.

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