(Tax Update) Malaysia Budget 2025 - New Tax Incentives

Are you ready to take advantage of Malaysia's new tax incentives under Budget 2025? The government is rolling out initiatives that can benefit investors and businesses ready to adopt the latest technologies and expand their market reach.

This includes the introduction of incentives for Smart Logistics Complex (SLC) development and new benefits for businesses that boost exports, especially in Integrated Circuit (IC) Design. If your company is ready to invest in logistics efficiency or expand exports, these incentives might be your next big opportunity.

Smart Logistics Complex (SLC) Incentive: Boosting Supply Chain Efficiency

The scope for logistics incentives has expanded from just Integrated Logistic Services (ILS) to the Smart Logistics Complex (SLC), designed to enhance supply chain efficiency by adopting advanced technology. This is a fantastic opportunity for logistics investors and operators who want to bring their operations into the age of Industry 4.0 (IR4.0).

Under the Smart Logistics Complex (SLC) incentive, qualified companies can claim an Investment Tax Allowance (ITA) of 60% on eligible Capital Expenditure (CAPEX) over a period of 5 years. This allowance can be applied against up to 70% of the company's Statutory Income (SI) for each year of assessment (YA).

Who Is Eligible for This Incentive?

To qualify for the ITA under SLC, the following criteria apply:

SLC Companies: This includes investors and operators involved in the construction of smart warehouses or those leasing these smart warehouses on long-term leases (minimum of 10 years).
Qualified Logistics Services: The services covered include regional distribution centres, integrated logistics services, storage of hazardous goods, and cold chain logistics.
Warehouse Requirements: The warehouse must have a minimum size of 30,000 square meters.
Industry 4.0 Adoption: Companies must adopt at least three Industry 4.0 (IR4.0) technologies, such as Artificial Intelligence (AI), Internet of Things (IoT), or blockchain.

This incentive is applicable for applications accepted by the Malaysian Investment Development Authority (MIDA) from 1 January 2025 to 31 December 2027.

Increased Export Incentives: Making Malaysia a Hub for IC Design

In line with the New Industrial Master Plan 2030 (NIMP), the scope for increased export incentives has now been expanded to cover Integrated Circuit (IC) Design services. This aims to establish Malaysia as a hub for advanced IC Design Technology and Solutions.

Effective from YA 2025, this incentive is designed to encourage more investments into the high-tech sector, aligning with the country’s vision to become a leader in IC Design.

If your business is into IC Design or planning to expand into this field, this incentive is your ticket to becoming part of Malaysia's push towards advanced technology and greater global competitiveness.

Need help navigating these updates? Our team at KTP is here to guide you. Feel free to contact us with any questions or for further assistance in planning your taxes.

Past Update on Budget 2025

Dividend Income : https://www.ktp.com.my/blog/2percent-tax-dividend-income-above-rm100k/17oct2024
HR : https://www.ktp.com.my/blog/malaysia-budget-2025-hr/23oct2024
Companies : https://www.ktp.com.my/blog/malaysia-budget-2025-companies/24oct2024
Individual : https://www.ktp.com.my/blog/malaysia-budget-2025-individual/25oct2024

PS : Authored by Ms Lim Nguan Lian, our head of client relationship, on her personal LinkedIn.

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