Special Tax Incentive for Selected Services Activities under National Economic Recovery Plan (PENJANA)

The scope of Special Tax Incentive under the Economic Recovery Plan (PENJANA) is not only to assist manufacturing companies to relocate their operations to Malaysia. In Budget 2021, it also expanded to selected service activities, including companies adapting Industrial Revolution 4.0 and digitalization technology.

Key takeaways:

You will understand: -

1. Who is eligible for the tax incentive?

2. What are the tax incentives?

3. What are the selected service activities?

4. What are the key conditions to be fulfilled？

5. How to apply?

Summary of learnings:

1. Who is eligible for the tax incentive?

New company

A company that does not have:

a. any existing operation/entity in Malaysia with including the related company, or

b. any existing services operation in Malaysia but has an existing non-services operation, e.g. manufacturing

and is planning to:

a. Relocate its facility for qualifying services activities from any foreign country; or

b. Relocate new services activities; or

c. Establish new operation in Malaysia

Existing company

A foreign or locally owned company with existing services operation (including selected services activities) in Malaysia; and

Proposes to undertake selected services activities for a new business segment, which is separate from the operation of its existing services activities.

2. What are the tax incentives?

New company

• Income tax rate: 0% to 10%

• Period: up to 10 years.

Existing company

• Income tax rate: 10%

• Period: up to 10 years

3. What are the selected service activities?

The company must undertake any of the following service activities:

i. Provision of technology solutions based on substantial scientific or engineering challenges;

ii. Provision of Infrastructure and technology for cloud computing;

iii. Research and development/design and development activities;

iv. Medical devices testing laboratory and clinical trials; and

v. Any services or manufacturing-related services activities determined by the Minister of Finance

4. What are the key conditions to be fulfilled?

Some of the key conditions are outlined as below:

i. Company incorporated under Companies Act 2016 and resident in Malaysia;

ii. To commence business operation within one year from the date of approval;

iii. Incur the first capital expenditure within one year from the date of approval for the incentive and to be completed within three years from the date of the first capital expenditure was incurred; and

iv. To incur capital investment or business expenditure in the following areas:

a. Adoption of Industrial Revolution 4.0 or digitalisation technology;

b. Employment opportunities for Malaysians including fresh Malaysian graduates;

c. Technology transfer;

d. Utilization of local goods and services;

e. Internship for Malaysian students;

f. Collaboration with local industries/institutions/universities.

5. How to apply?

The completed application should be submitted in three (3) sets of PENJANA (Services) Form to MIDA before 31 December 2022.

Source:

https://www.mida.gov.my/wp-content/uploads/2021/09/Revised-Guideline-Relocation-Incentive_as-at-22.9.2021-for-MIDAs-website_final-v2.pdf

Visit Us

• Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

• Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

• Website www.ktp.com.my

• Instagram https://bit.ly/3jZuZuI

• Linkedin https://bit.ly/3sapf4l

• Telegram http://bit.ly/3ptmlpn

THK (Secretarial, Account, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients

• Website www.thks.com.my

• Facebook https://bit.ly/3nQ98rs

KTP Lifestyle

An internal community for our colleagues on work and leisure.

• Tiktok http://bit.ly/3u9LR6Q

• Youtube http://bit.ly/3ppmjyE

• Facebook http://bit.ly/3ateoMz

• Instagram https://bit.ly/3jZpKLo

KTP Career

An external job community on vacancy in Johor Bahru for interns, graduates & experienced candidates.

• Instagram https://bit.ly/3u2PxHg

• Facebook http://bit.ly/3rPxz9o

#Ktp #Thks