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GROWING BUSINESS

"Creativity is piercing the mundane to find the marvelous"

Bill Moyers

Tax Incentives in Malaysia

There are different types of tax incentives offered in Malaysia in the form of tax exemptions, allowances related to capital expenditure and enhanced tax deductions. Although the income is exempted from tax, tax will have to be paid on the dividends paid on tax exempted income. In the case of allowances, there is a provision to carry forward the unutilized allowances until it is utilized fully. The above mentioned tax incentives can be leveraged by tax resident companies.

 

A. Manufacturing / Services / Trading Sector

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Pioneer Status (PS) and Investment Tax Allowance (ITA)

Companies that have generally started production less than a year and fall under the promoted activity or promoted product criteria in the manufacturing, food processing, agricultural, hotel, tourism or other industrial or commercial sectors will be eligible to avail benefits under ITA or PS.

Pioneer Status (PS): Tax will be exempted on 70% of the income for a period of 5 years from the date of start of production.
Investment Tax Allowance (ITA): From the date of approval up to a period of 5 years, 60% of the QCE, or Qualifying Capital Expenditure should be offset against 70% of the statutory income for every year up to hen YA will be fully utilized.

Companies can also opt for reinvestment allowance by surrendering its PS/ITA status, but this should be done before the expiry of its PS/ITA status.

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Special Incentive Scheme

Companies that are incorporated in Malaysia and are generating revenues from an “approved business” from the Minister of Finance are eligible for this scheme.

Incentive:
Companies can enjoy tax exemption on 70% of statutory income (unless a rate is mentioned by the Minster) on the approved business or an income tax exemption on statutory income of the approved business on any allowances at a rate decided by the Minster.

Allowance for Increased Export

Companies that are based in Malaysia and have been operating in the manufacturing or agriculture industry and have exported produces from their respective industries are eligible for this allowance.

Approved Services Project (ASP)

Companies operating in sectors such as communication, utilities and transportation services or its subsectors who have incurred QCE on ASP or are a part of the approved service subsectors from the Minister of Finance fall under this category.

Food Production

If a company invests in its subsidiary that has an approved license for food production, then it can claim a tax deduction that is equivalent to the amount the parent company has invested in its subsidiary.
Subsidiary companies that are into the food production industry approved by the Minster are eligible for 100% tax exemption on the statutory income for a period of up to 10 years on new projects and up to 5 years on expansion projects.

Reinvestment Allowance (RA)

Companies based in Malaysia that have been operating for 36 months and above and have spent on QCE of the factory, plant and machinery based in Malaysia for reasons to expand, modernize and automate their units or in the agricultural industry is eligible for this allowance.

 

B. Biotechnology

Companies that are indulged in biotechnology related activities and have an approval as Bionexus Status Company from the Biotechnology Coporation Sdn Bhd, Malaysia are eligible.

Incentive

  • Up to 10 years for new companies and up to 5 years for expansion projects, 100% exemption is provided from the year they start generating statutory income. Also, 100% of the ITA on QCE has to be offset within 5 years against 1005 of the statutory income they earn.

  • The tax rate is concessional at 20% of the statutory income derived for businesses that are approved after the tax exempt period is expired up to a period of 10 years.

  • Buildings that are used with the sole purpose of approved business or expansion project as a BioNexus Company will get an industrial building allowance of 10% for a period of 10 years.

  • The stamp duties and real property gains tax are exempted for BioNexus Company that enters into mergers or acquisitions with other biotechnology companies.

  • Exemption is given on import duty for raw materials and components that are imported by the companies.

Also, in the initial stages, the total investment made towards seed capital of a BioNexus company is exempted from tax for all individuals and companies.

 

C. Education

i) Private Higher Education Institutions (PHEI)

The expenses incurred towards development of new courses with compliance of regulatory requirements are exempt from tax.

Incentive
The deduction in expense can be claimed for a period spreading over 3 years.

ii) Non-Profit Oriented School

To qualify under this criteria, the school has to be approved and recognized by the Ministry of Education (MOE ) as a non-profit oriented school.

Incentive
There is a tax exemption provided on the income earned from this school.

iii) Profit Oriented Private or International School

Schools that are profit oriented or international schools registered with the Ministry of Education fall under this category.

Incentive

  • 100% tax exemption on QCE incurred within 5 years and this is to be used for a statutory income offset of 70% or 70% exemption on income tax for a period of 5 years.

  • All educational equipment imported towards these schools is exempted from import duty.

  • Expenses incurred towards promotional expenses overseas can be double deducted.

iv) Pre-School Education/ Kindergarten

All private pre-schools and kindergartens registered with the MOE are eligible.

Incentive

  • Up to a period of 5 years, there will be a tax exemption on the statutory income earned from the business of pre-school or kindergarten.

  • For the building used as pre-school or kindergarten, an IBA at 10% per annum will be given.

 

D. Green Incentives

  • If any green technology equipment has to be purchased, an investment tax allowance can be claimed.

  • For the income generated from the usage of green technology and services, an income tax exemption is given.

 

E. Healthcare and Wellness

Medical Tourism

If any new or existing company plans to expand, modernize or refurbish to provide private healthcare facility which benefits a minimum of 5% of healthcare travelers out of all the patients, an exemption is provided.

Incentive
An exemption of 100% of QCE incurred can be claimed on the statutory income for a period of up to 5 years.

 

F. Information and Communication Technology

Cost of Developing Websites

For e-commerce websites, the costs incurred towards the development of website is exempted with an annual exemption of 20% for a period of 5 years.

Offshore Trading via Website in Malaysia

For offshore trading companies that are approved and are operated by non-residents of Malaysia by using a website in Malaysia for sale of foreign goods outside Malaysia, an exemption is provided.

Incentive
An incentive on income tax is given for 5 years which is calculated based on a formula.

Multimedia Super Corridor

MSC status companies that indulge in high capital intensive dealings can claim a 100% tax exemption on statutory income for 5+5 years or claim an ITA of 100% QCE against statutory income for 5 years.

If ICT companies relocate to the cybercities or cybercenters, they are eligible for a 100% tax exemption for 10 years on statutory income or 100% QCE against 100% statutory income for 5 years.

If companies have a MSC status but are located outside the designated areas, an exemption of 75% on the statutory income is given for a period of 5 years and a 100% tax exemption is given for an additional 5 years if they relocate to MSC designated areas.

 

G. Regional Operations

International Trading Company

The companies that are incorporated in Malaysia need to fulfill the below mentioned criteria:

  • 60% Malaysian owned equity and should be registered with MATRADE.

  • The annual sales should exceed RM10 Million.

  • Trading of commodities should not account for more than 20% of the annual sales of the company.

  • They should make use of local services for finance, insurance and transport.

Incentive
There is a tax exemption provided equivalent to 20% of the increased export value which can be offset against 70% of the statutory income for a period of 5 years.

Global Incentive for Trading (GIFT) Program

A company based in Labuan can apply to Labuan FSA so that they are recognized as a Labuan International Commodity Trading Company and fall under the GIFT category so that they can trade in physical and derivative instruments in foreign currencies in the following sectors:

  • Petroleum and products related to the petroleum industries

  • Agricultural produce

  • Refined Raw materials

  • Chemicals

  • Based Minerals

Incentive

  • A corporate tax of 3% on chargeable profits is reflected in the audited accounts as per the Labuan Business Activity Tax Act of 1990 or

  • If a company is purely trading in LNG, they can have a tax exemption for a period of the first three years after which, they will have to pay the above mentioned tax.

Principal Hub

Companies based and incorporated in Malaysia and operate both regionally and internationally from Malaysia for all their operations fall under this category.

Incentive
Companies that qualify under this fall under either of the 3 tier corporate tax rates of 0%, 5% or 10%.

 

H.Logistics

Shipping

Individuals of Malaysia who are carrying a transport business involving passengers or cargo by sea using Malaysian ships either owned or chartered fall under this category.

Incentive
A tax exemption is given on 70% of the statutory income.

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Integrated Logistics Services (ILS)

Either an individual or a company which is 60% owned and undertake activities such as freight forwarding, transportation and warehousing along with one more mandatory designated activity fall under this category.

Incentive

  • PS along with 70% exemption for a period of 5 years.

  • ITA of 60% on QCE can be set off against 70% of the statutory income for a period of 5 years.

 
If you have any further queries regarding the tax incentives in Malaysia, feel free to get in touch with us and we will be glad to assist.

Estate & Trust Planning With Custody Services in Malaysia

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We Work With You to Grow and Preserve Your Precious Assets that You Have Been Building for Years

Growing your assets and preserving your legacy can be difficult but nonetheless important to secure your family’s future. This is where we come help you. At 3E Accounting PLT Malaysia, we offer you specialised and premier estate & trust planning with custody services through our affiliate partner helping you both preserve & transfer wealth to your future generations.

 

Our Areas of Service Specialisation

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We provide you with a comprehensive suite of estate and trust planning services including:

  • Will Writing

  • Will Translation

  • Annual Custody

  • Lifetime Custody

  • Executor Appointment

  • Estate Administration

  • Private Trust Set Up

  • Trust Management

  • Islamic Estate & Trust Planning Services

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Our affiliate partner will work with you cohesively to protect your assets & wealth and will also navigate you through the process of setting-up a trust. They will help you identify and mitigate potential risks and simultaneously help you maintain control over your finances by:

  • Lowering estate taxes

  • Expeditiously and privately distributing assets

  • Outlining medical wishes

  • Philanthropic and foundation giving

  • Professionally managing trusts

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At Faizal & Partners, we believe you’re the architect of the legacy and we’re your partners in helping your create the blueprint. We are committed to delivering personalized estate and trust planning services to our clients because we believe that every client has different goals and unique needs. So, we, with our affiliate partner, first listen and learn about your needs and financial goals and review your current financial position to develop and implement a strategy that works for you and is in the best interest of you and your family.

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We work with our affiliate partner to deliver you the best in class estate & trust planning services helping you mitigate inheritance tax, preserve your assets for your beneficiaries, and distribute estate promptly and in the right way. We also offer you quality support to smoothly settle the estate of the deceased by paying off the debts & liabilities of the deceased and establishing inheritance and beneficiary rights.

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With us, you can also benefit from willing writing and translation services. Remember, will writing is extremely important if you wish to pass your assets to your future generations. It is needed because you get to decide who gets what from your estate. Otherwise, the people you truly would like to benefit sometimes may not get anything. For example, if you are unmarried, your partner may not get anything if you’re not married to him/her.

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For more information on estate & trust planning with custody services or service assistance, get in touch with us today. Now is your best chance to secure the future of your next generation. Don’t let go of this opportunity. Grow and preserve your wealth smartly!

Trust Management Services in Malaysia

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Private Trust set up is for the benefit of one or more ascertainable beneficiaries. Setting up and managing Trust can be easier if you engage with professional management. How can you manage your Trust?

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Firstly, you need to determine whether a Trust is right for you. You need to decide whether to set up a personal Trust when you create your estate plan. Trusts can be an excellent tool for you to accomplish your financial goals. Regardless your goal is to provide lifestyle continuity for your family, contributing to your grandchildren’s education, caring for your elderly parents, or helping to provide for the financial well-being of your surviving spouse, a Trust is something that can provide you with both the control and the flexibility you need.

When you are considering to name one or a few individual trustees, a corporate trustee or a combination of individual and corporate trustees, you should take in some of the following elements into consideration.

 

Experience

The trustee of your Trust carries a significant responsibility for the financial well-being of your current and future beneficiaries. Your trustee should feel comfortable choosing and monitoring the investment manager, weighing and evaluating requests for distributions and making potentially difficult decisions.

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Moreover, your trustee also needs to be willing to accept significant recordkeeping responsibilities, which includes accounting for the receipt and disbursement of income and principal from the Trust assets and prepare and filing any annual Trust income tax returns that are required. Hence, having an inexperienced trustee may not be the best solution.

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A corporate trustee with experience and expertise in Trust and investing is an attractive alternative.

 

Objectivity

Sometimes, even in the most loving families, relations can somewhat become difficult and emotionally charged. It will be difficult for a trustee to act objectively when crafting Trust document that explains your intent and provides directions, if your trustee is your parents, siblings, relatives or friend.

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Comparing to a trustee who is someone close to you, a corporate trustee, on the other hand, who is an outsider can make decisions free from bias and considerations of family dynamics.

 

Confidentiality

It is likely to be your top consideration when it comes to the details when setting up your Trust. You should feel assured that your privacy and financial matters will be valued and treated with the utmost respect. Hence, corporate trustees would be your better choice.

 

Continuity

While the responsibilities for trustees are such significant, illness or age could actually prevent an individual from performing the duties of a trustee. Therefore, by choosing a corporate trustee, it will help you with the continuity for the full term of your Trust, to better protect your future.

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By engaging with us as your corporate trustee, we will keep you up to date with all these:

  • Monthly statements showing all accounts activity for the period

  • Quarterly reviews, which provide a market overview for the three-month period, information on investment decisions made on behalf of the Trust.

  • Extensive documentation, which includes estimated tax basis and gain (loss) information

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Apart from that, by appointing us as your Trustee, we will take care of the Trust Administration as well:

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  • Administering the Trust in accordance with the Trust instrument

  • Administering the Trust in an unbiased and professional manner

  • Maintaining all bookkeeping and recordkeeping

  • Performing annual administrative account reviews

  • Preparing and filing all required fiduciary tax returns (federal and state) for all irrevocable Trusts

  • Handling insurance premium payments and notices for irrevocable life insurance Trusts

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By engaging us for Trust Management Services, we would be able to provide you with support, advice and guidance from private Trust setting up till Trust management services to ease your burden, assist you for a better provision in your future. Contact us today for more information.

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