KUALA LUMPUR, June 4 — The Malaysia Digital Economy Corporation (MDEC), with the support of the Digital Ministry and the Finance Ministry, recently introduced an innovative tax incentive scheme for Malaysia Digital (MD) companies.
It said the new scheme offers a range of benefits for digital companies leveraging technologies like artificial intelligence (AI), cybersecurity, blockchain, advanced connectivity networks, and cutting-edge telecommunications technology.
Eligible companies can benefit from competitive corporate income tax rate reductions on both intellectual property (IP) and non-IP income, as well as an Investment Tax Allowance (ITA) for capital-intensive service activities.
“This flexible scheme structure allows companies to enjoy tax incentives based on their set commitments, thereby fostering growth in high-value activities and rewarding performance,” MDEC said in a statement today.
It also said that the scheme provides tax incentives for eligible companies in two categories: New Investment Incentive and Expansion Incentive.
Companies in the new investment category can enjoy a reduced tax rate (RTR) of zero per cent on IP income and five per cent or 10 per cent on non-IP income for ten years.
Meanwhile, companies in the expansion category can benefit from an RTR of 15 per cent for five years.
“Alternatively, companies in both categories can opt for an ITA ranging from 30 per cent to 100 per cent for qualifying capital expenditure, which can be deducted up to 100 per cent from statutory income for five years,” MDEC said.
This initiative aligns with the government’s commitment under Budget 2024 to introduce revenue-based tax incentives aimed at strengthening the economy by driving investment in high-growth and high-value sectors, fostering the creation of new economic clusters, and balancing growth with environmental, social, and governance sustainability.
MDEC chief executive officer Mahadzir Aziz said the introduction of these tax incentives is in line with current economic needs and international best practices while also acting as a catalyst to bolster Malaysia’s position as a digital hub in Asean.
“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 advanced technologies within the country,” he said.
— Bernama
