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Incentives for High Technology Companies

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A high technology company is a company engaged in promoted activities or in the production of promoted products in areas of new and emerging technologies.

A high technology company qualifies for:

1 Pioneer Status with income tax exemption of 100% of statutory income for a period of 5 years. Unabsorbed capital allowances as well as accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; or
2 Investment Tax Allowance of 60% (100% for promoted areas) on the qualifying capital expenditure incurred within 5 years from the date the first qualifying capital expenditure is incurred. The allowance can be utilised to offset against 100% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised.

Applications for this incentive should be submitted to the Malaysian Investment Development Authority (MIDA).

The high technology company must fulfil the following criteria:

1 The percentage of local R&D expenditure to gross sales should be at least 1% on an annual basis. The company has 3 years from its date of operation or commencement of business to comply with this requirement.
2 Scientific and technical staff having degrees or diplomas with a minimum of 5 years experience in related fields should comprise at least 7% of the company total workforce.

See: List of Promoted Activities & Products – High Technology Companies (PDF: 53kb)

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