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Contract R&D, R&D companies requires MITI’s R&D status company approval effective Jan 1 – MIDA

Contract R&D, R&D companies requires MITI’s R&D status company approval effective Jan 1 – MIDA

03 Feb 2022

The definitions of “Contract Research and Development (R&D) Company” and “R&D Company” under section 2 of the  Promotion of Investments Act 1986 (PIA) have been amended to require approval as an R&D status company by the Minister of International Trade and Industry (MITI) effective from Jan 1, 2022, the Malaysian Investment Development Authority (MIDA) said.

In a statement today, MIDA said this is following the passing of the Finance Bill 2021 in Parliament on Dec 23, 2021, which incorporated several announcements made in the Budget 2022 and contained proposed amendments, including to PIA.

“Companies in the business of providing R&D services, namely contract R&D company and R&D company, that wish to apply for R&D tax incentive will be granted R&D status (subject to MITI’s approval) for a period of five years,” it said.

It said the Finance Bill 2021 further provided that existing contract R&D companies and R&D companies which have been given approval as an R&D company prior to Jan 1, 2022 are required to notify MIDA within the grace period from Jan 1 to June 30, 2022 for consideration.

“Companies approved with this status may apply for extension to MIDA. However, the granting of the approval is subject to consideration by MITI and the Ministry of Finance,” it said.

It said for this purpose, companies are required to provide documents to prove that they are undertaking activities relating to R&D as defined under the PIA and complied with conditions imposed previously in their approval letters.

“Failure to do so will cause the companies to cease their status as approved companies fulfilling the definition of contract R&D company and R&D company,” it added.

Source: Bernama