Government Incentives
Incentives for Small and Medium-scale Companies
Small and medium-scale companies with a paid-up capital of RM2.5 million and below are eligible for a reduced corporate tax of 20% on chargeable incomes up to RM500,000. The tax rate on the remaining chargeable income is maintained at 26%.
Small-scale manufacturing companies incorporated in Malaysia with shareholders’ funds not exceeding RM500,000 and having at least 60% Malaysian equity 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. |
A sole proprietorship or partnership is eligible to apply for this incentive provided a new private limited/limited company is formed to take over the existing production/activities.
In order to qualify for the incentive, a small-scale company has to comply with one of the following criteria:
| 1 | The value-added must be at least 15%; or |
| 2 | The project contributes towards the socio-economic development of the rural population |
The company shall carry out the manufacture of products or participate in activities listed as promoted products and activities for small-scale companies.
Applications for this incentive should be submitted to the Malaysian Investment Development Authority (MIDA).