Government Incentives
Incentives to Strengthen Industrial Linkages
In order to encourage large companies to participate in an Industrial Linkage Programme (ILP), expenditure incurred in training of employees, product development and testing, and factory auditing to ensure the quality of vendors’ products, will be allowed as a deduction in the computation of income tax.
Vendors, including small and medium-scale companies that propose to manufacture promoted products or participate in promoted activities in an ILP, are eligible for the following incentives:
| 1 | Pioneer Status with income tax exemption of 100% of statutory income for a period of 5 years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or |
| 2 | Investment Tax Allowance of 60% (100% for promoted areas) on the qualifying capital expenditure incurred within 5 years. The allowance can be offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. |
In order to encourage vendors to manufacture promoted products or participate in activities for the international market, vendors in an approved ILP who are capable of achieving world-class standards in terms of price, quality and capacity, will be eligible for the following incentives:
| 1 | Pioneer Status with income tax exemption of 100% of statutory income for a period of 5 years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or |
| 2 | Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within a period of 5 years which the company can offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. |
Applications for this incentive should be submitted to the Malaysian Investment Development Authority (MIDA).