(Tax Update) New Tax Incentive - Smart Logistic Complex (SLC)

MIDA has issued the Guideline for the application of tax incentive for smart logistics complex (SLC) on 15 January 2025. The guidelines are available on MIDA’s website (Forms and Guidelines >Services Sector > Smart Logistic Complex)

Overview of SLC Incentives

The Smart Logistics Complex (SLC) incentive is part of Malaysia's effort to enhance its logistics sector by adopting Industry 4.0 technologies. This initiative aims to attract investments in smart warehouses that utilize advanced technologies like the Internet of Things (IoT), Artificial Intelligence (AI), and automation.

Eligibility Criteria

To qualify for the SLC incentives, companies must meet the following criteria:

Investor and Operator Model : A company that invests in smart warehouses and carries out qualifying logistic services.
Operator Model : A company that leases smart warehouses for a minimum term of ten years to carry out qualifying logistics services
Logistics Services : Eligible logistics services include regional distribution centers, integrated logistics services, hazardous goods storage, and cold chain logistics.
Warehouse Size : The smart warehouse must have a minimum build-up area of 30,000 square meters.
Technology Adoption : The warehouse must incorporate at least three Industry 4.0 elements.

Tax Incentives

Investment Tax Allowance (ITA): Companies are eligible for an income tax exemption equivalent to an ITA of 60% on qualifying capital expenditures incurred over a period of five years.
Offset Against Income: The allowance can be offset against up to 70% of statutory income for each year of assessment.
Carry Forward: Unutilized allowances can be carried forward until fully absorbed.

Application Process

Application Period: Applications for these incentives must be submitted to MIDA from January 1, 2025, to December 31, 2027.
Eligible Applicants: New or existing companies investing in smart warehouses and providing qualifying logistics services are eligible. Only one company within the same group can apply for the SLC incentive.

Additional Requirements

Local Incorporation: Companies must be locally incorporated.
Use of Local Infrastructure: Preference should be given to using local seaports, airports, and haulage/logistic companies.
Technical Training: Companies must implement internship programs and technical training for employees.
Operating Expenditure : Companies must incur adequate operating expenditure
Employees : Companies must employ 80% full time employees that are Malaysian
Partnership : Companies must partner with at least three logistics companies (60% Malaysian equity) for integrated logistics activities.

Final Words

Currently, there is no publicly available information on specific companies that have successfully applied for the Smart Logistics Complex (SLC) tax incentives in Malaysia. The SLC incentive was introduced as part of Malaysia's Budget 2025, and applications for these incentives are being accepted from January 1, 2025, to December 31, 2027.

As the program is relatively new, it may take some time for companies to apply and for successful applications to be publicly disclosed.

However, companies that are likely to benefit from these incentives include those involved in logistics services such as:

Regional Distribution Centers
Integrated Logistics Services
Dangerous Goods Storage
Cold Chain Logistics

These companies would need to incorporate advanced technologies like IoT, AI, and automation in their operations to qualify for the incentives1 2 4.

For specific examples, it would be best to monitor announcements from MIDA or industry news outlets as more companies begin to apply and receive these incentives.

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