Tax Incentives for Financial Services Companies
For financial services companies, here are some tax exemptions that are available:
Full income tax exemption is available on to Islamic banks licensed under the Islamic Financial Services Act 2013. All income earned from Islamic banking activities conducted in international currencies will be exempted
A complete income tax exemption is also applied to management fees received by resident fund management companies which have been established according to Islamic principles for the management of funds of foreign and local investors.
There are some companies under the Malaysia’s financial sector that are eligible for tax incentives, which include:
Special Purpose Vehicles for Islamic financing
Companies relayed to operation of Tun Razak Exchange
Real estate and property trust funds
Foreign Fund management companies
Tax Incentives for ICT Companies in Malaysia
In the ICT industry, tax incentives for tax residents are also available. These expenses will be tax exempted:
Offshore trading via websites based in Malaysia
Investments and expenditures related to MSC Malaysia or international trading companies
Any business activities related to principal hubs and transportation, warehousing and freight forwarding
To get tax incentives as an IT company in Malaysia, the company must register with the Malaysia Digital Economy Corporation (MDEC) to obtain the Malaysia Digital (MD) status.
Tax Incentives for Biotechnological Companies in Malaysia
Biotech companies which have received approval as Bionexus status are eligible for a complete offset of income earned through an investment tax allowance on qualifying capital expenditure for companies which have been in operation for 10 years or less.
Here are some other incentives:
The concessional tax rate for a business which has been approved after its exempt tax period has expired for a period of up to 10 years is 0% of its statutory income
Profits derived from stamp duty and real property gains tax are tax-exempt for Bionexus companies
Exemptions are given to import duty for raw materials as well as components which have been imported by such companies.
Total investment made towards the seed capital of a Bionexus company is exempted from tax
Green Incentives in Malaysia
Green technology and equipment receive an investment tax allowance when purchased. Malaysian tax resident companies of any sector are entitled to it.
This same income tax incentive is also given for the usage of green technology and services. Companies in the healthcare and wellness sector receive a 100% exemption on qualifying capital expenditures incurred on statutory income for a period of up to five years.
Regional Operations and Tax Incentives
A principal hub is a locally incorporated company that uses Malaysia as a base for its Global and Regional operations through management, control, and support of critical functions. The tax incentives which are available for Malaysian tax residents and companies who conduct their regional operations in Malaysia include:
Equity or ownership conditions
Foreign exchange administration
Customs duty exemptions for raw materials, product components, or finished products brought into free zones
Licensed and bonded warehouses for production or repackaging, cargo consolidation, and integration before products are to be distributed to their final customers; this exemption only applies to goods-based companies