Malaysia Digital Tax Incentive
What is Malaysia Digital (MD) Tax Incentive?
MD Tax Incentive is a new outcome-based tax incentive scheme offered to eligible MD companies that undertake activity utilising any of the MD promoted tech enablers.
The outcome-based approach uses a tiered system in granting tax incentives, to encourage companies to spur the economy through investments in high-growth high-value areas and to create new economic clusters, expand domestic network, and provide balance between economic growth and environmental, social and governance sustainability.
This incentive scheme is designed to align with the international standards set by the Organisation for Economic Co-operation and Development (OECD).
What are the types of tax incentive offered?
New Investment Incentive
Expansion Incentive
Reduced Tax Rate (RTR)
0%
on qualifying intellectual property (IP) income subject to modified nexus approach
AND
5% OR 10%
on non-IP incomefor 10 years
Investment Tax Allowance (ITA)
60% OR 100%
of qualifying capital expenditure against up to 100% statutory income for 5 years
Reduced Tax Rate (RTR)
15%
on qualifying IP income subject to modified nexus approach and non-IP income for 5 years
Investment Tax Allowance (ITA)
30% OR 60%
of qualifying capital expenditure against up to 100% statutory income for 5 years
Eligibility Criteria
To be eligible to apply for the New Investment Incentive, the applicant must be a company which:
- is incorporated or deemed to be registered under the Companies Act 2016 and resident in Malaysia
- has a minimum paid up capital of RM50,000.00
- has made an application for the award of MD Status
- is proposing to undertake the qualifying activity in Malaysia
- has not issued any sales invoice for the qualifying activity in Malaysia prior to the date the tax incentive application is received, or has sixty per cent direct or indirect Malaysian equity ownership and has not issued any sales invoice for the qualifying activity in Malaysia more than twelve months prior to the date the tax incentive application is received
- is not granted any tax incentive by the Government of Malaysia in relation to the qualifying activity.
Eligibility Criteria
To be eligible to apply for Expansion Incentive, the applicant must be a company which:
- is incorporated or deemed to be registered under the Companies Act 2016 and resident in Malaysia
- has a minimum paid up capital of RM250,000.00
- has been in operation for at least 36 months
- is an MD or MSC Malaysia Status company
- in the case where the company has been granted tax incentive for existing activity under the MD or MSC Malaysia Status financial incentive schemes, the company has met all conditions under the tax incentive or has surrendered the tax incentive
- is proposing to undertake the qualifying activity in Malaysia
- has not issued any sales invoice for the qualifying activity in Malaysia prior to the date the tax incentive application is received
- is not granted any tax incentive by the Government of Malaysia in relation to the qualifying activity.
New Investment Incentive
Expansion Incentive
Reduced Tax Rate (RTR)
0%
on qualifying intellectual property (IP) income subject to modified nexus approach
AND
5% OR 10%
on non-IP incomefor 10 years
Investment Tax Allowance (ITA)
60% OR 100%
of qualifying capital expenditure against up to 100% statutory income for 5 years
Eligibility Criteria
To be eligible to apply for the New Investment Incentive, the applicant must be a company which:
- is incorporated or deemed to be registered under the Companies Act 2016 and resident in Malaysia
- has a minimum paid up capital of RM50,000.00
- has made an application for the award of MD Status
- is proposing to undertake the qualifying activity in Malaysia
- has not issued any sales invoice for the qualifying activity in Malaysia prior to the date the tax incentive application is received, or has sixty per cent direct or indirect Malaysian equity ownership and has not issued any sales invoice for the qualifying activity in Malaysia more than twelve months prior to the date the tax incentive application is received
- is not granted any tax incentive by the Government of Malaysia in relation to the qualifying activity.
MD Promoted Tech Enablers
The outcome-based tax incentive is offered to eligible MD companies who undertake qualifying activities by leveraging any of the following promoted tech enablers:
Artificial Intelligence & Big Data Analytics
Blockchain
Cloud
Cybersecurity
Drone Technology
Internet of Things
Robotic and/or Automation
Creative Media Technology including extended reality (XR) and/or mixed reality (MR)
Integrated Circuit (IC) Design with Embedded Software
Advanced network connectivity and/or telecommunication technology
Artificial Intelligence & Big Data Analytics
Blockchain
Cloud
Cybersecurity
Drone Technology
Internet of Things
Robotic and/or Automation
Creative Media Technology including extended reality (XR) and/or mixed reality (MR)
Integrated Circuit (IC) Design with Embedded Software
Advanced network connectivity and/or telecommunication technology
Application Process
Step 1
Application Submission
- The applicant must complete the online application form on the Malaysia Digital Platform
- The applicant is required to pay a processing fee of:
- a) RM1,080.00 (including SST) for New Investment; or
- b) RM2,160.00 (including SST) for Expansion (comprises processing fee for adding activity)
- The application will be officially closed if no payment and submission is made within 6 months from the application registration date
- Applicant may request a consultation before applying for MD Tax Incentive by e-mail to [email protected]
Step 2
Application Acceptance
- An acknowledgment receipt with the assignment of a Business Analyst will be sent to the applicant's registered e-mail upon submission of the application.
- The application will be reviewed for a preliminary check on the applicant’s eligibility for MD Tax Incentive.
- Application with unsuccessful preliminary check will be rejected.
Step 3
Evaluation & Assessment
- At this stage, the applicant is to provide additional information and documents and/or present the proposed activities to the Business Analyst to support the application, if required.
- The application review will be completed by Business Analyst and deliberated by relevant stakeholder(s) within 21 working days from date of the complete application is received.
Step 4
Application Deliberation
- The application will be presented in the National Committee on Investment (NCI) for consideration and approval.
- Upon NCI’s decision, the decision (approval/ rejection) letter will be issued by MIDA to the company.
- If rejected, the applicant may re-apply subject to fulfilment of the eligibility criteria.
Step 1
Application Submission
- The applicant must complete the online application form on the Malaysia Digital Platform
- The applicant is required to pay a processing fee of:
- a) RM1,080.00 (including SST) for New Investment; or
- b) RM2,160.00 (including SST) for Expansion (comprises processing fee for adding activity)
- The application will be officially closed if no payment and submission is made within 6 months from the application registration date
- Applicant may request a consultation before applying for MD Tax Incentive by e-mail to [email protected]
Step 2
Application Acceptance
- An acknowledgment receipt with the assignment of a Business Analyst will be sent to the applicant's registered e-mail upon submission of the application.
- The application will be reviewed for a preliminary check on the applicant’s eligibility for MD Tax Incentive.
- Application with unsuccessful preliminary check will be rejected.
Step 3
Evaluation & Assessment
- At this stage, the applicant is to provide additional information and documents and/or present the proposed activities to the Business Analyst to support the application, if required.
- The application review will be completed by Business Analyst and deliberated by relevant stakeholder(s) within 21 working days from date of the complete application is received.
Step 4
Application Deliberation
- The application will be presented in the National Committee on Investment (NCI) for consideration and approval.
- Upon NCI’s decision, the decision (approval/ rejection) letter will be issued by MIDA to the company.
- If rejected, the applicant may re-apply subject to fulfilment of the eligibility criteria.
Apply for Malaysia Digital (MD) Status
Embark on your digital journey in Malaysia with us and be part of the Malaysia Digital Status companies
Apply for Malaysia Digital (MD) Status
Embark on your digital journey in Malaysia with us and be part of the Malaysia Digital Status companies
Apply for Malaysia Digital (MD) Status
Embark on your digital journey in Malaysia with us and be part of the Malaysia Digital Status companies
Apply for Malaysia Digital (MD) Status
Embark on your digital journey in Malaysia with us and be part of the Malaysia Digital Status companies
FREQUENTLY ASKED QUESTIONS
The outcome-based approach uses a tiered system in granting tax incentive, to encourage companies to spur the economy through investments in high-growth high-value areas and to create new economic clusters, expand domestic network, and provide balance between economic growth and environmental, social and governance sustainability.
This incentive scheme is designed to align with the international standards set by the Organisation for Economic Co-operation and Development (OECD).
(1) MD New Investment Incentive
MD New Investment Incentive aims to promote new investment activities in Malaysia and is offered to eligible MD Status company that proposes to undertake the qualifying activity under the tax incentive scheme. Under this New Investment Incentive, an eligible MD Status company may choose to enjoy either the reduced tax rate or investment tax allowance on income derived from the qualifying activity.
Please refer to the Guidelines on Malaysia Digital (MD) Tax Incentive (New Investment Incentive) for the eligibility criteria that an applicant needs to fulfil in order to apply for the tax incentive
(2) MD Expansion Incentive
MD Expansion Incentive is offered to encourage companies to undertake new activities or investment as well as to grow capabilities in Malaysia. Expansion Incentive targets MD/MSC Malaysia Status company that has completed initial incentive and proposes to undertake new activity.
This Expansion Incentive is also offered to an MSC Malaysia Status company that has not been granted any incentive on their existing activity and proposes to undertake new activity.
Under this Expansion Incentive, an eligible MD/MSC Malaysia Status company may choose to enjoy either the reduced tax rate or investment tax allowance on income derived from the new activity.
Please refer to the Guidelines on Malaysia Digital (MD) Tax Incentive (Expansion Incentive) for the eligibility criteria that an applicant needs to fulfil in order to apply for the tax incentive.
- MD New Investment Incentive
- Reduced Tax Rate (RTR): 0% RTR on qualifying intellectual property (IP) income subject to modified nexus approach AND 5% OR 10% on non-IP income for 10 years; or
- Investment Tax Allowance (ITA): 60% or 100% of qualifying capital expenditure against up to 100% statutory income for 5 years.
- MD Expansion Incentive
- Reduced Tax Rate (RTR): 15% RTR on qualifying IP income subject to modified nexus approach and non-IP income for 5 years; or
- Investment Tax Allowance (ITA): 30% or 60% of qualifying capital expenditure against up to 100% statutory income for 5 years.
- Qualifying activity means one or more activity that addresses opportunity or problem by utilising any of the following MD promoted tech enablers:
- artificial intelligence (AI) and/or big data analytics (BDA);
- internet of things (IOT);
- cybersecurity;
- cloud;
- blockchain;
- drone technology;
- creative media technology including extended reality (XR) and/or mixed reality (MR);
- integrated circuit (IC) design with embedded software;
- robotics and/or automation; and/or
- advanced network connectivity and/or telecommunication technology.
Please refer to the Guidelines on Malaysia Digital (MD) Tax Incentive (New Investment & Expansion) for further description.
Contact Us
If you do have any enquiries, please don’t hesitate to reach us.
Contact Us
If you do have any enquiries, please don’t hesitate to reach us.
Contact Us
If you do have any enquiries, please don’t hesitate to reach us.