Tax Incentives in Agriculture Industry

Tax Incentives in Agriculture Industry

Under the Promotion of Investments Act 1986, the term "company” in relation to agriculture includes:

  • agro-based cooperative societies and associations

  • sole proprietorships and partnerships engaged in agriculture.

Companies producing promoted products or engaged in promoted activities are eligible to apply for the following incentives:

Pioneer Status

As in the manufacturing sector, companies producing promoted products or engaged in promoted activities are eligible for Pioneer Status.

Investment Tax Allowance (ITA)

Companies producing promoted products or engaged in promoted activities can apply for Investment Tax Allowance (ITA). To enable agricultural projects to enjoy greater benefits, the Government has broadened the definition of qualifying capital expenditure to include the following:

  • the clearing and preparation of land;

  • the planting of crops;

  • the provision of plant and machinery used in Malaysia for the purposes of crop cultivation, animal farming, aquaculture, inland or deep-sea fishing and other agricultural or pastoral pursuits;

  • the construction of access roads including bridges, the construction or purchase of buildings (including those provided for the welfare of persons or as living accommodation for persons) and structural improvements on land or other structures which are used for the purposes of crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits.

In view of the time lag between start-up of the agricultural project and processing of the produce, integrated agricultural projects are eligible for ITA for an additional five years for expenditure incurred for processing or manufacturing operations.

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