Special Tax Incentive - Electrical & Electronic (E&E) Sector

Special Tax Incentive - Electrical & Electronic (E&E) Sector

Special Tax Incentive - Electrical & Electronic (E&E) Sector

Background

The main objective of this incentive is to further promote high-value added activities in the E&E industry to transition into 5G digital economy and Industry 4.0.

This Special Investment Tax Allowance is to encourage companies in the E&E sector that have exhausted the Reinvestment Allowance in Malaysia to further reinvest in Malaysia.

Type of Incentive:

Investment Tax Allowance of 50% on qualifying capital expenditure to be offset against 50% of Statutory Income.

The exemption period is valid for a period of 5 years starting from the date of the approval letter.

Eligibility Criteria:

1. Manufacturing company incorporated under the Companies Act, 1965/2016, and residents in Malaysia.

2. Possess valid Business License from the relevant Local Authority.

3. Possess Manufacturing License (ML) from MITI or Confirmation Letter of Exempted from Manufacturing License from MIDA (whichever is applicable).

4. The applicant company is engaged in manufacturing activities in the E&E sector and intend to reinvest for the purpose of expansion, automation, diversification and modernization.

5. The applicant company has fully exhausted the eligibility period of fifteen years to claim Reinvestment Allowance (RA) under Schedule 7A ITA 1967 by 31 December 2019 and is currently not enjoying any other tax incentives approved by the Government.

6. The applicant company will be subjected to the following conditions:

 a. The minimum investment in the related proposed projects shall be at least RM1.5 million in capital expenditure within a period of five (5) years as proposed

b. The company to incur the minimum yearly operational expenses (as proposed by company); and

c. The company to hire minimum number of Malaysian full time workers (as proposed by company)

Application Process:

1. Company submits application to MIDA through MIDA e-Incentive portal.

2. MIDA evaluates the non-technical eligibility.

3. MIDA issues a ‘Consideration Letter’ to the Applicant Company and Carbon Copies (c.c.) to the Minister of International Trade & Industry (MITI), Ministry of Finance (MoF), and Inland Revenue Board (IRB).

Effective Date of Application:

Applications received by MIDA from 1 January 2020 until 31 December 2021 are eligible to be considered for this incentive.

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