Malaysian Pioneer Status application consultant

PatentAgentip would like to assist you in applying Malaysian Pioneer Status for your business. Depending on the kind of business that you are engaged in, there is a possibility that you are entitled to a pioneer status. Accorded pioneer status entities will enjoy corporate tax relief for a certain period. Pioneer Status range from 5 to 10 years and is accorded by the Ministry of Finance through the ambit of MIDA (Malaysian Investment and Development Authority).

What is Pioneer Status?

Under the Malaysian Promotion of Investments Act 1986,
Pioneer status may be granted to all companies participating in a promoted activity or producing a promoted product. The power to determine any product or activity lies with the Minister of International Trade and Industry. Presently, gazetted lists for the promoted products or activities are as follows :-
a.promoted products or activities (including the promoted area);
b.promoted products or activities for small scale companies;
c.promoted products or activities for high-technology companies

Promoted Sectors:-

1. Manufacturing
5. Research and Development;
6.Technical or vocational training.
7.And also certain commercial sectors connected to manufacturing

Promoted product/activity

a) Promoted product/activity
Company will be granted tax exemption on 70% of the statutory income for 5 years The other 30% will follow the prevailing corporate tax rate.

b) Promoted product/activity in promoted area
Sabah, Sarawak, the Federal Territory of Labuan* and the designated Eastern Corridor of Peninsular Malaysia [which covers Kelantan, Terengganu, Pahang and the district of Mersing in Johor] will be granted tax exemption on 85% of the statutory income for 5 years. Remaining 15% follows prevailing corporate tax rate. As for Labuan, tax exemption is only applicable to the hotel and tourism industry. This is effective since 2005.

c) Promoted product/activity for high technology companies.
Full tax exemption on 100% of the statutory income for 5 years

d) Promoted product in an approved industrial linkage scheme (SMIs producing intermediate goods)
Full tax exemption on 100% of the statutory income for 5 years

e) Promoted product/activity of national and strategic importance including the MSC status ( and Bionexus) companies and product/activity in the approved linkage programme which achieve world class status.

Company will be granted full tax exemption on 100% of the statutory income for 5 years and is eligible for extension for another 5 years. Companies that have started operation are also eligible but the incentives will only be given on the additional income. For companies currently enjoying PS may apply for the incentives at the end of the existing incentive period. However, multimedia faculties (which provide courses of study) outside the MSC that have been accorded MSC status companies are only eligible for the tax incentives and not those accorded under the Bill of Guarantees

Contract Research and Development company (R&D)
If R&D services is provided to a company other than its related company, the company will enjoy full tax exemption on 100% of the statutory income for 5 years.

Some of the terms and conditions in order to enjoy tax exemptions are:-

(i) Company granted Pioneer Status must within 6 months request for a pioneer certificate, specifying among others the date of production from which the partial exemption/full exemption will be granted.

(ii) Capital allowances have to be utilised during the pioneer period and will not be allowed to be carried forward to the post pioneer period.

(iii) Losses unabsorbed during the pioneer period will not be allowed to be carried forward to the post pioneer period except for PS for Contract Research and Development Company.

(iv) Dividends paid out of tax-exempt income to shareholders will also be exempted from tax.

You may want to view the government's description of pioneer status sectors here

It must be emphasised that you should file a patent for your system or product so that the approval body can view it in good light. Still, if you are not backed by a patent, you can still apply for a pioneer status, only thing is that it is more difficult. But if you are wondering whether you are qualified for a patent, then contact our experts to look into your application. Moreover, with a patent in hand, you can go for government grants. Perhaps we can help.

Give us a thinker if you are considering applying for Malaysian Pioneer Status via email us or call us to seek directions.
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