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211
B19 INCENTIVES IN PROMOTED AREAS

Type of Incentive Sector Promoted Area Legislation
1(a)

Pioneer Status
Tax exemption on 85%
of statutory income for 5
years (as compared to
exemption of 70% for
projects located in areas
outside the promoted
areas). This incentive
has been extended for
another 5 years until
31 Dec 2005 (2001
Budget). The exemption
has been increased
from 85% to 100% for
applications received by
MIDA from 13 Sep 2003
to 31 Dec 2005 (2004
Budget). The application
period has been
extended for another 5
years until 31 Dec 2010
(2006 Budget).
2nd Round of
exemption for existing
companies which
relocate their
manufacturing activities
to the promoted areas
(2005 Budget).
Or
Manufacturing,
Agriculture
(including rearing
of chickens and
ducks w.e.f. 20
Oct 2001), Hotel
and Tourism, and
Manufacturing
Related Services
w.e.f. 20 Oct
2001

Eastern Corridor of
Peninsular Malaysia
State of Kelantan
State of
Terengganu
State of Pahang
District of Mersing
in the State of Johor
States of Sabah and
Sarawak
Federal Territory of
Labuan
State of Perlis
Promotion of
Investments
(Promoted Areas)
Order 1994
PU(A) 482/1994
and 80/1998
S. 21D of PIA
1986




Promotion of
Investments
(Promoted Areas)
(Amendment)
Order 2006
PU(A) 430/2006

1(b)

Investment Tax Allowance
(ITA)
Tax exemption of up to
85% of statutory income
for each year of
assessment from ITA
computed at 80% on
qualifying capital


Manufacturing,
Agriculture, Hotel
and Tourism, and
Manufacturing
Related Services
w.e.f. 20 Dec 2001
Eastern Corridor of
Peninsular Malaysia
State of Kelantan
State of
Terengganu
State of Pahang
District of Mersing
in the State of Johor
Promotion of
Investments
(Promoted Areas)
Order 1994
PU(A) 482/1994
and 80/1998
S. 29C of PIA
1986
INCENTIVES IN PROMOTED AREAS
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212
Type of Incentive Sector Promoted Area Legislation



expenditure incurred (as
compared to tax
exemption on 70% of
statutory income from
ITA computed at 60%
on qualifying capital
expenditure incurred for
projects located outside
the promoted areas)
within 5 years from the
date which the approval
is to take effect. This
incentive has been
extended for another 5
years until 31 Dec 2005
(2001 Budget). The rate
of ITA has been
increased from 80% to
100% of capital
expenditure incurred
and allowed to be set
off against 100% of
statutory income for
applications received by
MIDA from 13 Sep 2003
to 31 Dec 2005 (2004
Budget). The
application period has
been extended for
another 5 years until
31 Dec 2010 (2006
Budget).
(Prior to 1 Nov 1991,
the ITA rate varied in
accordance with the
criteria met and the
location of the promoted
activities).
States of Sabah and
Sarawak
Federal Territory of
Labuan


State of Perlis

Promotion of
Investments
(Promoted Areas)
(Amended) Order
2006
PU(A) 430/2006
2nd Round ITA for
existing companies
which relocate their
manufacturing activities
to the promoted areas
(2005 Budget).
And



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213
Type of Incentive Sector Promoted Area Legislation
1(c) Infrastructure Allowance
(IA)
Tax exemption of up to
100% of statutory
income (w.e.f. 13 Sep
2003) for each year of
assessment on IA
computed at 100% on
capital expenditure
incurred within 5 years
for the provision of
infrastructure. This
incentive has been
extended for another 5
years until 31 Dec 2005
(2001 Budget). The
application period for IA
has been extended for
another 5 years until
31 Dec 2010 (2006
Budget).
Manufacturing,
Agriculture, Hotel
and Tourism
Eastern Corridor of
Peninsular Malaysia
State of Kelantan
State of
Terengganu
State of Pahang
District of Mersing in
the State of Johor
States of Sabah and
Sarawak
Federal Territory of
Labuan
State of Perlis
Promotion of
Investments
(Promoted Areas)
Order 1994
PU(A) 482/1994
and 80/1998
S. 41B of PIA
1986




Promotion of
Investments
(Promoted Areas)
(Amendment)
Order 2006
PU(A) 430/2006
2 Reinvestment Allowance
(RA)
Tax exemption of up to
100% of statutory
income for each year of
assessment from RA
computed at 60% on
qualifying capital
expenditure incurred
within 5 years. As per
2002 Budget, this
incentive has been
extended for a 15-year
period. The rate of set
off against statutory
income has been
restricted to 70% from
100% (2012 Budget).
Manufacturing,
Agriculture,
Industrial
Adjustment
Programme
Eastern Corridor of
Peninsular Malaysia
State of Kelantan
State of
Terengganu
Pahang
District of Mersing in
the State of Johor
States of Sabah and
Sarawak
Federal Territory of
Labuan (w.e.f.
Y/A 2003)
ITA 1967
(Act 53) Sch 7A
State of Perlis

Promotion of
Investments
(Promoted Areas)
(Amendment)
Order 2006
PU(A) 430/2006





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214
Type of Incentive Sector Promoted Area Legislation
3(a) Exemption of Statutory
Income for Approved
Service Projects
Tax exemption on 85%
of statutory income for
5 years.
Or
Approved Service
Projects
transportation
communications
utilities
any other sub-
sector as
approved by
Minister of
Finance
Eastern Corridor of
Peninsular Malaysia
States of Sabah and
Sarawak
Guidelines on
Approved Service
Projects


3(b)

Investment Allowance (IA)
for Approved Service
Projects
Tax exemption of up to
85% of statutory
income for each year
of assessment from IA
computed at 80% on
qualifying capital
expenditure incurred
within 5 years from the
date which the
approval is to take
effect.

Approved Service
Projects
transportation
communications
utilities
any other
subsector as
approved by
Minister of
Finance
Eastern Corridor of
Peninsular Malaysia
States of Sabah and
Sarawak

Guidelines on
Approved Service
Projects [Sch 7B
of ITA 1967 (Act
53) only provides
for normal rate of
70% of statutory
income]
4
Income tax exemption for
Iskandar Development
Region (IDR) status
company
Tax exemption on
100% of statutory
income from qualifying
activities for 10 years
provided the
operations commence
on or before the end of
2015.
Income tax exemption for
a developer undertaking
development activities in
IDR
Tax exemption for a
developer on statutory
income from disposal
Creative industries
and related
services
Education services
Financial advisory
and consulting
services
Healthcare and
related services
Logistics services
Tourism

Selected areas in
Johor
Income Tax
(Exemption) (No.
20) Order 2007
PU(A) 418/2007






Income Tax
(Exemption) (No.
19) Order 2007
PU(A) 417/2007



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215
Type of Incentive Sector Promoted Area Legislation
of any right in or over
any land in an
approved node
commencing from the
first year of
assessment until
Y/A 2015.
Tax exemption for a
developer on statutory
income from rental or
disposal of building
located in an approved
node commencing
from the first year of
assessment until Y/A
2020.
Tax exemption for a
development manager
on statutory income
from the provision of
management,
supervisory or
marketing services
until Y/A 2020.
Preferential tax rate of
15% for knowledge
workers in IDR effective
Y/A 2010.






















Company granted
IDR, BioNexus or
MSC status






















Income Tax
(Determination of
Knowledge
Worker, Qualified
Activity and
Specified Region)
Rules 2010
PU(A) 344/2010