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1. Pioneer Status
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1.1 |
As
in the manufacturing sector, companies producing promoted products
or engaged in promoted activities are eligible for Pioneer Status.
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1.2 |
A
Pioneer Status company enjoys a partial exemption from income
tax. It pays tax on 30% of its statutory income for five years,
commencing from its Production Day (defined as the day of first
sale of the agriculture produce).
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1.3 |
Applications
received from 13 September 2003 from companies located in the
promoted areas i.e. the States of Sabah and Sarawak and the designated
"Eastern Corridor" of Peninsular Malaysia, will enjoy
a 100% tax exemption on their statutory income during their 5-year
exemption period. Companies which have been granted approval for
this incentive but have not commenced commercial production, or
applications under consideration, are also eligible. All project
applications received by 31 December 2005 will be eligible for
this enhanced incentive.
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1.4 |
Applications
should be submitted to MIDA. |
2. Investment Tax Allowance
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2.1 |
As
an alternative to Pioneer Status, companies producing promoted
products or engaged in promoted activities can apply for Investment
Tax Allowance (ITA). A company granted ITA is eligible for an
allowance of 60% on its qualifying capital expenditure incurred
within five years from the date on which the first qualifying
capital expenditure is incurred.
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2.2 |
Companies
can offset this allowance against 70% of their statutory income
in the year of assessment. Any unutilised allowance can be carried
forward to subsequent years until fully utilised. The remaining
30% of the statutory income is taxed at the prevailing company
tax rate.
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2.3 |
Applications
received from 13 September 2003 from companies located in the
promoted areas i.e. the States of Sabah and Sarawak, and
the designated "Eastern Corridor" of Peninsular Malaysia,
will enjoy an allowance of 100% on the qualifying capital expenditure
incurred within a period of five years. The allowance can be utilised
to offset against 100% of the statutory income for each year of
assessment. Companies which have been granted approval for this
incentive but have not commenced commercial production, or applications
under consideration, are also eligible. All project applications
received by 31 December 2005 will be eligible for this enhanced
incentive.
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2.4 |
Applications
should be submitted to MIDA.
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2.5 |
To
increase the benefits to agricultural projects, the government
has broadened the definition of qualifying capital expenditure
to include expenditure incurred on:
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Clearing
and preparation of land |
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Planting
of crops |
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Provision
of plant and machinery used in Malaysia for the purpose
of crop cultivation, animal farming, aquaculture,
inland fishing or deep-sea fishing, and other agricultural
or pastoral pursuits |
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Construction
of access roads including bridges, construction or purchase
of buildings (including those provided for the welfare of
people or as living accommodation), and structura improvements
on land or other structures which are used for crop cultivation,
animal farming, aquaculture, inland fishing and other agricultural
or pastoral pursuits. Such roads, bridges, buildings, structural
improvements on land and other structures should be on land
forming part of the land used for the purpose of such crop
cultivation, animal farming, aquaculture, inland fishing
and other agricultural or pastoral pursuits |
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2.6 |
In
view of the time lag between start-up and processing of the produce,
integrated agricultural projects qualify for ITA for an additional
five years for expenditure incurred for processing or manufacturing
operations.
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2.7 |
Applications
should be submitted to MIDA. |
3. Incentives for Food Production
3.1 |
Incentives
for New Projects
3.1.1 |
To
encourage food production, a company which invests in a subsidiary
company engaged in food production, together with the subsidiary
company, qualifies for one of the following
incentive packages:
Incentive Package A:
a) |
A
company which takes up a 100% equity in a subsidiary
company engaged in food production receives a tax
deduction equivalent to the amount of investment made
in that subsidiary; and
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b) |
The
subsidiary company enjoys full income tax exemption
on its statutory income for 10 years commencing from
the first year the company enjoys profits, in which:
- |
losses
incurred before and during the exemption period
can be brought forward after the exemption period
of 10 years; |
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dividends
paid from the exempt income are exempted in
the hands of the shareholders.
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Incentive Package B:
a) |
A
company which takes up 100% equity in a subsidiary
company engaged in food
production will be given group relief for the losses
incurred by the subsidiary company before it records
any profit, and
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b) |
The
subsidiary company enjoys full income tax exemption
on its statutory income for 10 years. This commences
from the first year the company enjoys profits, in
which:
- |
losses
incurred during the tax exemption period can
be brought forward after the exemption period
of 10 years; and |
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dividends
paid from the exempt income are exempted in
the hands of the shareholders.
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3.1.2 |
The
eligible food products are as approved by the Minister of
Finance. These include kenaf, vegetables, fruits, herbs, spices,
aquaculture, and the rearing of cattle, goats and sheep. Effective
from 21 September 2002, deep-sea fishing enjoys the same incentives
under packages A and B. |
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4. Incentives for Existing Companies which Reinvest
4.1 |
An
existing company that reinvests in the production of the above
food products also qualifies for the same incentives for a period
of five years.
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4.2 |
The
food production project for both new and existing companies should
commence within a year from the date the incentive is approved.
Applications should be submitted to the Ministry of Agriculture
by 31 December 2005.
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5. Incentives for Reinvestment in Food Processing Activities
5.1 |
A
locally-owned manufacturing company with Malaysian equity of at
least 60% that reinvests in promoted food processing activities
is eligible for another round of the Pioneer Status or Investment
Tax Allowance (ITA) incentive. Activities located in the promoted
areas, i.e. the States of Sabah, Sarawak and the "Eastern
Corridor" of Peninsular Malaysia, are eligible for the Pioneer
Status and ITA incentives in accordance with that given to promoted
areas.
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5.2 |
This
incentive is for applications received by MIDA from 21 September
2002.
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6. Additional Incentives for the Agricultural Sector
| 6.1 |
Reinvestment
Allowance
6.1.1 |
Persons
or companies engaged for at least 12 months in the production
of essential food such as rice, maize, vegetables, tubers,
livestock, aquatic products, and any other activities approved
by the Minister of Finance can enjoy the Reinvestment Allowance
(RA).
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6.1.2 |
The qualifying
capital expenditure includes expenditure incurred on:
| - |
Clearing
and preparation of land |
| - |
Planting
of crops |
| - |
Provision
of plant and machinery used in Malaysia for the purpose
of crop cultivation, animal farming, aquaculture, inland
fishing or deep-sea fishing, and other agricultural
or pastoral pursuits |
| - |
Construction
of access roads including bridges, construction or purchase
of buildings (including those provided for the welfare
of people or as living accommodation), and structural
improvements on land or other structures which are used
for crop cultivation, animal farming, aquaculture, inland
fishing and other agricultural or pastoral pursuits.
Such roads, bridges, buildings, structural improvements
on land and other structures should be on land forming
part of the land used for the purpose of such
crop cultivation, animal farming, aquaculture, inland
fishing and other agricultural or pastoral pursuits |
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6.1.3 |
The
RA is in the form of an allowance of 60% of the qualifying
capital expenditure incurred
within a period of 15 years beginning from the year the
first reinvestment is made. The allowance can be offset
against 70% of the statutory income in the year of assessment.
Untilised allowances can be carried forward to the following
years until fully utilised. Companies that undertake reinvestment
projects in the promoted areas i.e. the States of
Sabah, Sarawak and the designated "Eastern Corridor"
of Peninsular Malaysia, can offset the allowance fully against
their statutory income for that year of assessment.
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6.1.4 |
Claims
should be submitted to the IRB. |
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7. Reinvestment Incentives for Resource-Based Industries
7.1 |
This
incentive is offered to companies that are at least 51% Malaysian-owned
and are in the rubber, oil palm and wood-based industries producing
products which have export potential.Companies in these industries
reinvesting for expansion purposes are eligible for another round
of Pioneer Status or Investment Tax Allowance (ITA). Activities
located in the promoted areas i.e. the States of Sabah, Sarawak
and the designated "Eastern Corridor" of Peninsular
Malaysia are eligible for higher levels of exemption/ allowance
under Pioneer Status or ITA in accordance with that given for
promoted areas.
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7.2 |
Applications
should be submitted to MIDA. |
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Incentives
for Agricultural Sector
