THE Malaysia Digital Economy Corp (MDEC) on May 31, introduced a new tax incentive scheme for Malaysia digital (MD) companies.
The initiative, supported by the Ministry of Communications and Digital and the Ministry of Finance, fulfils the government’s commitment to promote economic growth through targeted tax breaks.
The programme targets digital companies using advanced technologies like artificial intelligence (AI) and blockchain, including reduced corporate income tax rates for intellectual property (IP) and non-IP income.
Additionally, there is an investment tax allowance for companies with high upfront costs in digital services.
The programme is flexible, allowing companies to tailor their tax breaks based on their growth goals.
It is believed to encourage investment in high - value activities and reward strong performance.
The tax breaks offered in the programme encompass two categories: New Investment where companies can enjoy significant tax reductions on both intellectual property (IP) income (0% for 10 years); and non - IP income (5% or 10% for 10 years). Meanwhile, expansion companies benefit from a 15% lower tax rate for five years.
MDEC CEO Mahadhir Aziz said the MD tax aligns with current economic needs and international best practices, highlighting its commitment to leading the digital revolution.
“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 cutting - edge technologies locally.
“In alignment with Prime Minister Datuk Seri Anwar Ibrahim’s call for Malaysia to become more investor - friendly and guided by the Madani Economy framework, we are enhancing our processes to increase the ease of doing business, improve efficiency in processing digital investments, and eliminate unnecessary steps that complicate investment execution,” he said in a statement.
The MD tax incentive scheme signifies the government’s continued dedication to fostering a thriving digital ecosystem and propelling Malaysia’s transformation into a leading digital economy.
As of April 30, 2024, over 5,000 companies had been designated as MD firms.
The achievement highlighted the MD programme’s success in driving digital advancements across various industries, aligning with national development goals like the Madani Economy and the New Industrial Master Plan 2030.
Source: https://themalaysianreserve.com/2024/06/04/mdec-unveils-tax-breaks-to-attract-digital-investment/