KUALA LUMPUR – Malaysia Digital Economy Corp (MDEC) has introduced an outcome-based tax incentive for digital companies in efforts to further bolster the country’s economy.
In a statement, it said that this tax incentive scheme would catalyse investments in high-growth and high-value sectors, foster the creation of new economic clusters and promote environmental sustainability.
This initiative is carried out in support of the Digital Ministry and the Finance Ministry for Malaysia Digital (MD) companies.
“The new MD tax incentive scheme offers a range of benefits for digital companies leveraging cutting-edge technologies such as artificial intelligence, cybersecurity, blockchain and advanced network connectivity.
“Eligible MD companies can benefit from a competitively reduced corporate income tax rate on both intellectual property (IP) and non-IP incomes, along with an investment tax allowance (ITA) for capital-intensive services activities,” the statement read.
MDEC also said the scheme’s flexible structure would allow companies to enjoy tax incentives based on their specified commitments, thereby fostering growth in high-value activities and rewarding performance.
The scheme offers tax incentives for eligible companies in two categories, namely new investment and expansion.
“Companies under the new investment category may enjoy a reduced tax rate of 0% on IP income and 5% or 10% on non-IP income for 10 years.
“Meanwhile, companies under the expansion category may enjoy a 15% reduced tax rate for five years.
“Alternatively, companies under both categories can opt for ITA between 30% and 100% on capital expenditure for qualifying activities that can be offset against up to 100% of statutory income for five years,” it added.
MDEC chief executive Mahadhir Aziz has said the tax incentive is a game changer to make Malaysia a digital hub of Asean since it demonstrates a commitment to driving the digital revolution while also being in line with current economic needs and worldwide best practices.
“By attracting global talent and investment in high-growth sectors, we aim to create a thriving digital ecosystem, generate high-value jobs, boost research and development activities, and integrate cutting-edge technologies locally,” he said.
“In alignment with Prime Minister Datuk Seri Anwar Ibrahim’s call for Malaysia to become more investor-friendly and guided by the Madani Economy framework, we are enhancing our processes to increase the ease of doing business, improve efficiency in processing digital investments and eliminate unnecessary steps that complicate investment execution,” he added.
As of December 2022, the Multimedia Super Corridor initiative, which was introduced in 1996, together with its associated Bill of Guarantees, had drawn RM485 billion in cumulative investments and produced over 223,000 high-value jobs, he cited.
The number of awarded MD companies has surpassed 5,000, underscoring the MD initiative’s pivotal role in fostering digital innovation across diverse industries and supporting transformation plans outlined in both the Madani Economy framework and the New Industrial Master Plan 2030 as of April 30.
Companies interested in the new MD tax incentive can apply now. Details are available at https://mdec.my/malaysiadigital/tax-incentive. – June 4, 2024
