Tax holiday for new capital investments above RM300 million in manufacturing

Malaysian government is granting a tax holiday for companies, both foreign and local, which intend to make capital investment of more than RM300 million.

The tax waiver is also given to Malaysian companies which relocate overseas investments back home.

The two incentives are in force for applications received between July 1, 2020 and Dec 31, 2021, announced Prime Minister Tan Sri Muhyiddin Yassin when he unveiled the economic stimulus package dubbed the National Economic Regeneration Plan (Penjana).

Companies, both foreign and local, which make capital investment of between RM300 million and RM500 million will be able to enjoy zero investment tax for 10 years.

For capital investment above RM500 million, companies will be given 15 years of tax holidays.

For Malaysian companies which relocate their overseas facilities back to home, they are entitled to a 100% investment tax allowance for five years. The tax holidays are subject to location transfer.

The requirement for the tax waiver is that the pledged amount must be invested within three years and companies need to start operations within one year from the approval date, said Muhyiddin.

The government also allocated an additional RM50 million to the Malaysian Investment Development Authority (MIDA) for promotion and marketing activities, he added.

Meanwhile, the government will also establish the Project Acceleration and Coordination Unit (PACU) to speed up implementation and coordination of approved investments.

On the digitalisation front, the government will introduce a National Penjana Fund, an allocation of RM600 million by the government to be matched by the same amount by domestic investors as a move to spur venture capital.

Among the interested international investors are SK Group, Hanwha Asset Management, KB Investment Co Ltd, Provident Growth, 500 Startups and The Hive, Muhyiddin said.

The regeneration plan involves 40 initiatives worth RM35 billion, of which RM10 billion is a direct fiscal injection by the government.

Source: The Edge Markets