Posted on 07 Apr 2015
The Ministry of International Trade and Industry has announced detailed guidelines for four new tax incentives introduced under the 2015 Budget for investors and companies, in a bid to attract more investments into the country.
These are namely incentives for less developed areas, industrial area management, capital allowance to increase automation in labour intensive industries as well as for the establishment of a principal hub.
The new tax incentives are to promote balanced regional growth and inclusiveness, especially in the less developed areas, accelerate the shift of manufacturing and services sectors into high valueadded, knowledge intensive and innovation-based industries and enhance the development of key services subsectors.
Minister Datuk Seri Mustapa Mohamed said the new incentive for the establishment of principal hub will be implemented on May 1, 2015 and will replace the existing International Procurement Centres, Regional Distribution Centres and Operational Headquarters Incentive Schemes, which will be terminated by April 30, 2015.
"This is a game changer for Malaysia. We're tailoring the incentives to make sure Malaysia derives maximum benefits from the operations of multinational corporations in Malaysia. We want many things, such as manufacturing, services, financial activities and human resources management to be located in Malaysia," Mustapa told a press conference yesterday.
The incentive is in the form of tiered rate of tax reductions based on the level of value created. An approved principal hub company is eligible for a three-tiered corporate taxation rate of 0% (tier 1), 5% (tier 2) or 10% (tier 3). In 2014, 156 regional establishments were approved.
On the incentive for less developed areas, there are customised incentives such as income tax exemption, stamp duty exemption and withholding tax exemption.
The incentive for industrial area management will provide 100% tax exemption on statutory income for five years commencing from the date the company commences its activities.
Mustapa said there is an oversupply of 595 industrial estates in Malaysia but many do not meet investors' requirements. Hence, the new incentive is to ensure that industrial estates are better managed.
"Mida (Malaysian Investment Development Authority) has formed a taskforce committee for pilot projects on park management for Selangor, Malacca, Perak and Johor to identify the best park management model to be implemented."
The capital allowance to increase automation in labour intensive industries provides automation capital allowance of 200% on the first RM4 million expenditure incurred within the year of assessment 2015 to 2017 for high labour intensive industries; and on the first RM2 million expenditure incurred within the year of assessment 2015 to 2017 for other industries.
Applications for the incentives can be made now, except for the principal hub incentive that will start on May 1, 2015.
