(Tax Update) Unlock the Benefits of Tax Incentives for Your Food Production Business

(Tax Update) Unlock the Benefits of Tax Incentives for Your Food Production Business

At KTP, we understand the value that strategic investments in the agricultural sector can bring to your business. With the release of Public Ruling No. 5/2023, the Inland Revenue Board of Malaysia has introduced enticing tax incentives for approved food production projects, designed to encourage investments and boost the agricultural industry’s growth.

Here’s how you can capitalize on these incentives to enhance your business prospects:

Overview of Tax Incentives

The Malaysian government provides significant tax relief for approved food production projects, encompassing a variety of agricultural activities. Whether you are planting crops, engaging in aquaculture, or rearing livestock, these incentives are tailored to support and mitigate the risks associated with agricultural investments.

Approved Projects for Tax Incentives

The tax incentive covers a wide range of agricultural activities aimed at increasing food production in Malaysia. Here are some of the projects that qualify under Public Ruling No. 5/2023:

  • Crop Plantation : Includes planting of kenaf, vegetables, fruits, herbs, spices, and other industrial or cash crops. Specific commencement dates apply to each type of planting.

  • Aquaculture and Livestock Rearing : This encompasses the aquaculture of various species and the rearing of animals such as cows, buffaloes, goats, sheep, and deer.

  • Fishing Activities : Both deep sea and high seas fishing activities are eligible for the tax incentives.

  • Specialized Farming : Projects such as apiculture (beekeeping) and the cultivation of feed mill crops identified and approved by the Ministry of Agriculture and Food Security (MAFS).

Who Can Undertake These Projects?

Eligibility to participate in these incentive-backed projects extends to:

  • Incorporated Entities : Companies and cooperatives incorporated under the Malaysian Companies Act 2016.

  • Agricultural Associations : Includes Area, Federal, and State Farmers’ and Fishermen’s Associations.

  • Individuals and Partnerships : Sole proprietors and partnerships engaged solely in agricultural or fisheries activities for the approved project.

Key Tax Benefits

  • Tax Exemption : Enjoy a 100% tax exemption for up to ten consecutive years for new projects, and five years for expansion projects. This exemption applies from the first year of assessment in which you derive statutory income from the project.

  • Capital Allowances : Claim deductions for capital expenditures involved in your project, ensuring that your initial investment is economically feasible.

  • Loss Carry Forward : Adjusted losses incurred before and during the exemption period can be carried forward, offsetting future taxable income once the exemption period concludes.

Eligibility Criteria

  • Type of Projects : The incentive covers a wide range of agricultural activities, from planting and aquaculture to livestock rearing and deep-sea fishing.

  • Qualifying Entities : Eligible applicants include companies, cooperatives, and sole proprietors engaged solely in agricultural or fishery activities.

  • Application Process : Applications must be submitted to the Ministry of Agriculture and Food Security (MAFS) before project commencement and within specified deadlines.

How to Apply

Visit the MAFS website for detailed criteria and application procedures. Ensure that your project meets all stipulated requirements and that you maintain separate financial records for the activities under the incentive.

Strategic Investment

Investing in related companies undertaking approved projects can also yield tax deductions, enhancing the financial viability of your broader corporate structure.

Conclusion

Leveraging these tax incentives can substantially decrease the financial risks associated with agricultural projects, making it an attractive investment opportunity. At KTP, we are ready to guide you through the application process and help optimize your tax position.

For further information, please visit our website at www.ktp.com.my or contact us directly. Seize this opportunity to grow your business and contribute to Malaysia’s agricultural advancement with the support of KTP, your trusted tax agent.

Source

IRB Public Ruling 5/2023 AGRICULTURAL SECTOR INCENTIVE – TAX INCENTIVE FOR APPROVED FOOD PRODUCTION PROJECT Sector https://www.hasil.gov.my/media/tkqlzbit/draft-public-rulling-agricultural-sector-incentive.pdf

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