In a statement, MDEC said the new scheme offers a range of benefits for digital companies leveraging technologies such as artificial intelligence (AI), cybersecurity, blockchain, advanced connectivity networks, and cutting-edge telecommunications technology.
It said eligible companies will 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,” it said.
It said the scheme provides tax incentives for eligible companies in two categories; New Investment Incentive and Expansion Incentive.
MDEC said companies under the new investment category will enjoy a reduced tax rate (RTR) of 0% on IP income and 5% or 10% on non-IP income for 10 years.
On the other hand, companies in the expansion category can benefit from an RTR of 15% for five years.
“Alternatively, companies in both categories can opt for an ITA ranging from 30% to 100% for qualifying capital expenditure, which can be deducted up to 100% from statutory income for five years,” it said.
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 CEO Mahadzir Aziz said the introduction of these tax incentives aligns with the 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.