Tax Incentives & Tax Reliefs in Malaysia

Tax incentives in Malaysia can be granted through income exemptions or any allowances while unutilised allowances can be carried forward indefinitely to be utilised against future statutory income. These information and incentives are useful for both existing companies and investors who are thinking of setting up a company in Malaysia.

In order to be eligible for incentives, you must be identified as a tax resident in Malaysia. Every citizen of Malaysia is automatically defined as a tax resident of the country. However, foreigners who lived in Malaysia or is currently living within the Malaysia territorial borders for more than 182 days will also be regarded as a tax resident in Malaysia.

Here’s a quick summary of a tax resident and non-resident:

For one to be a tax resident in Malaysia, a Certificate of Residence in Malaysia is required, and the application for the certificate is free. To do so, you must contact the tax authorities and present your passport and documentations of travel into and out of Malaysia over the past year.

There are various types of tax incentives provided in Malaysia to tax resident companies or tax resident individuals. They include, among others:

Companies in these 3 sectors are entitled to tax incentives related to areas such as

Here are the benefits for some of the incentives mentioned above:

For financial services companies, here are some tax exemptions that are available:

There are some companies under the Malaysia’s financial sector that are eligible for tax incentives, which include:

In the ICT industry, tax incentives for tax residents are also available. These expenses will be tax exempted:

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:

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.

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: