To encourage investment in the promoted areas i.e. the States of Sabah and Sarawak and the designated "Eastern Corridor"+ of Peninsular Malaysia, applications received from 13 September 2003 from companies located in these areas 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 mconsideration, are also eligible. All project applications received by 31 December 2005 will be eligible for this enhanced incentive.

As an alternative to Pioneer Status, a company may apply for Investment Tax Allowance (ITA). A company granted ITA gets an allowance of 60% on its qualifying capital expenditure (such as factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date on which the first qualifying capital expenditure is incurred.

The company can offset this allowance against 70% of its statutory income for each year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully  utilised. The remaining 30% of its statutory income will be taxed at the prevailing company tax rate.

To encourage investment in the promoted areas i.e. the States of Sabah and Sarawak and the designated "Eastern Corridor" of Peninsular Malaysia, applications received from 13 September 2003 from companies located in these areas 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.

A manufacturing company that has been in operation for at least 12 months and incurs qualifying capital expenditure to expand, modernize or automate its existing business or diversify its existing business into any related products within the same industry can apply for Reinvestment Allowance (RA).

The RA is given at the rate of 60% on the qualifying capital expenditure incurred by the company, and can be offset against 70% of its statutory income for the year of assessment. Any unutilised allowance can be carried forward to subsequent years until fully utilised.

The RA will be given for a period of 15 consecutive years beginning from the year the first reinvestment is made. Companies can only claim the RA upon the completion of the qualifying project, i.e. after the building is completed or when the plant/machinery is put to operational use. Assets acquired for the reinvestment cannot be disposed of within a period of two years from the time of the reinvestment.

Effective from 21 September 2002, a company that intends to reinvest before the expiry of its Pioneer Status can surrender its Pioneer Status for cancellation and be eligible for RA.

Effective from the year of assessment 2003, small- and medium-scale companies with a paid-up capital of RM2.5 million and below are eligible for a reduced corporate tax of 20% on the chargeable income of up to RM100,000. The tax rate on the remaining chargeable income is maintained at 28%. Dividends distributed will be given a tax credit of 20% in the hands of the      shareholders.

The threshold for chargeable income eligible for the reduced corporate tax rate of 20% is increased from RM100,000 to RM500,000 effective from the year of assessment 2004. Small-scale manufacturing companies incorporated in Malaysia with shareholders' funds not exceeding RM500,000 and having at least 60% Malaysian equity are eligible for the following incentives: