1. INTRODUCTION MD New Investment Incentive - aims to promote new investment activities in Malaysia and is offered to eligible companies that propose to undertake the qualifying activity under the tax incentive scheme. Under this New Investment Incentive, an eligible company may choose to enjoy either the reduced tax rate or investment tax allowance on income derived from the qualifying activity.
2. ELIGIBILITY CRITERIA
2.1 To be eligible to apply for the New Investment Incentive, the applicant must be a company which: (a) is incorporated or deemed to be registered under the Companies Act 2016 and resident in Malaysia; (b) has a minimum paid up capital of RM50,000.00; (c) has made an application for the award of MD Status2 ; (d) is proposing to undertake the qualifying activity in Malaysia; (e) has not issued any sales invoice for the qualifying activity in Malaysia prior to the date the tax incentive application is received, or has sixty per cent direct or indirect Malaysian equity ownership and has not issued any sales invoice for the qualifying activity in Malaysia more than twelve months prior to the date the tax incentive application is received; and (f) is not granted any tax incentive by the Government of Malaysia in relation to the qualifying activity.
2.2 Qualifying activity means one or more activities which fulfill the criteria of MD Promoted Activities
2.3 If a company has any related company which has been granted tax incentive in respect of the qualifying activity, the company shall not be qualified to be granted tax incentive under the New Investment Incentive in respect of the same qualifying activit
2.4 If a company has any related company which has issued any sales invoice for the qualifying activity in Malaysia prior to the date the tax incentive application by the company is received, the company shall not be qualified to be granted tax incentive under the New Investment Incentive in respect of the same qualifying activity.
2.5 The company may choose to apply for the reduced tax rate OR investment tax allowance under the New Investment Incentive.
3. REDUCED TAX RATE
3.1 Scope and Conditions:
| Non-IP income | IP income | |||
| Tax Rate | 10 % ----------- and or 5 % | 0 % | ||
| Years of Assessment (YA) | 10 consecutive YA | |||
| Conditions | (1) To employ an adequate number of full-time employees (FTE) in Malaysia to carry on the qualifying activity throughout the YA.(not like before - 50 workers) | |||
| (2) To ensure the FTE comprises adequate number of knowledge workers with a minimum average monthly basic salary of RM5,000.00 throughout the YA. | ||||
| (3) To incur an adequate amount of annual operating expenditure5 in Malaysia to carry on the qualifying activity by the end of each YA. | ||||
| (4)To undertake the qualifying activity in Malaysia throughout the YA | ||||
| (5) To remain an MD Status company and comply with all the conditions under MD Status at all times. | ||||
| (6) To submit to MDEC annually a self-declaration form (SDF) on compliance of conditions within 7 months from the end of each year of assessment, and the information submitted in the SDF must first be verified by an independent external auditor appointed by the company at its own costs6 | ||||
| (7) Any other conditions stated in the approval letter. | Cell 6 | |||
| (8)Not Applicable | (8) To comply with modified nexus approach | |||
| Additional Conditions | Not Applicable | (9) To meet minimum 3 conditions related to sustainable economic development such as relevant initiatives in education, social and environment at the end of each YA as stated in the approval letter. | Not Applicable | Not Applicable |
| (10)Any other conditions stated in the approval letter |
3.2 For non-IP income, the company shall be entitled to enjoy a reduced tax rate of 10% subject to compliance of conditions (1) to (7). If the company complies with conditions (1) to (7) and additional conditions (9) and (10), the company shall be entitled to enjoy reduced tax rate of 5%. For IP income, the company shall be entitled to enjoy a reduced tax rate of 0% subject to compliance of conditions (1) to (8) and (10).
3.3 The company shall be entitled to enjoy the applicable tax rate for each year of assessment based on compliance of conditions applicable for that tax rate.
| Period of investment tax allowance (ITA Period) | 5 consecutive years | ||||
| Rate of investment tax allowance (ITA Rate) | 60% of qualifying capital expenditure, against up to 100% statutory incom | ||||
| Conditions (to be complied within 3 years from principle approval date | (1) To incur an adequate amount of qualifying capital expenditure. | (2) To employ an adequate number of full-time employees (FTE) in Malaysia to carry on the qualifying activity. | (3) To undertake the qualifying activity in Malaysia at all times | (4) To remain an MD Status company and comply with all the conditions under MD Status at all times. | (5) Any other conditions stated in the approval letter. |
| Rate of investment tax allowance (ITA Rate) | 100% of qualifying capital expenditure, against up to 100% statutory income | ||||
| Additional Conditions (to be complied by expiry of ITA Period) | (6) To maintain conditions (1) to (5). | (7) To meet minimum 3 conditions related to sustainable economic development such as relevant initiatives in education, social and environment, each in year 4 and year 5 of the ITA Period, as stated in the approval letter. |