The main objective of this particular tax incentive is to attract investors to relocate their businesses into Malaysia by addressing the risk of reshoring.
1. Type of Incentive
a. For New Company
- 10 years of 0% special tax rate for new investment in the manufacturing sector with capital investment between RM300million to RM500 million.
- 15 years of 0% special tax rate for new investment in the manufacturing sector with capital investment above RM500 million.
b. For Existing Company
- 5 years of 100% Investment Tax Allowance (ITA) for an existing company in Malaysia when it relocates overseas facilities into Malaysia with capital investment above RM300 million. The allowance can offset 100% against the statutory income for each assessment year.
2. Definition of ‘New Company’ and ‘Existing Company’
a. New Company
- Company relocating manufacturing facility for eligible activities from any country to Malaysia; or
- Company establishing a new operation in Malaysia; and
- Do not have existing manufacturing operation in Malaysia
b. Existing Company
- A foreign or locally owned company that has an existing manufacturing operation in Malaysia and relocate its manufacturing operation from outside Malaysia for a new business segment. The products from the new business segment are not of the expansion project for existing products.
3. Eligibility Criteria
- The company meets the definition of ‘new company’ or ‘existing company’ under the incentive.
- The company to undertake manufacturing activities other than manufacturing activities listed in Appendix A – Disqualified Activities.
- The new company or existing company to incur the first capital expenditure within 1 year from the approval date.
- The company to incur the capital expenditure within 3 years from the first capital expenditure incurred.
- The existing company to apply for this incentive to keep separate accounts for products/activities with Tax Incentive and products/activities without Tax Incentive, or to set up new entities to carry out the project.
4. Effective Date of Application
- Applications received by the Malaysian Investment Development Authority (MIDA) from 1st July 2020 until 31st December 2021 are eligible to be considered for this incentive.
5. Application Submission
Applications should be made using the relevant forms as follows:
- New Manufacturing Project – ICA / JA-1
- Expansion and/or Diversification Project – ICA / JA-2
Source from MIDA Official Website (https://www.mida.gov.my/home/incentive-under-penjana/posts/)
For more information, please visit 20200923113443_GDSpecialTaxIncentivePENJANA17092020
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