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Incentives for GREEN TECHNOLOGY INDUSTRY

Green Technology Incentive, Income Tax Act, 1967

  • Investment Tax Exemption (ITE)

  • Income Tax Allowance (ITA)

  • Waste Eco Park (WEP)

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Two categories of tax incentives available for companies involved in green technology projects in Malaysia: Income Tax Exemption (ITE) and Investment Tax Allowance (ITA)

1. Income Tax Exemption (ITE)

This incentive applies to companies undertaking specific projects across various industries. Eligible projects include:

  • Renewable Energy (RE): Feasibility studies, system design, and consultancy services.

  • Energy Efficiency (EE): Advisory, consultancy, energy audits, and management.

  • Green Building: Design and consultancy, testing, and commissioning of equipment or systems.

  • Green Data Centre: Certification of products, equipment, and buildings for green standards.

  • Certification/Verification Bodies: Services related to certification or verification.

  • Green Township: Advisory, consultancy, and feasibility studies for green township projects.

2. Investment Tax Allowance (ITA)

This incentive supports companies investing in capital expenditure for green-related projects. Examples include:

  • Renewable Energy (RE): Investments in solar, biomass, biogas, mini-hydro, and geothermal energy projects.

  • Energy Efficiency (EE): Purchase of energy-efficient equipment or adoption of energy-saving technologies.

  • Green Building: Construction of buildings certified with green building standards.

  • Green Data Centre: Investment in energy-efficient products or solutions for data centers.

  • Integrated Waste Management: Projects involving recycling, recovery, or treatment of waste.

Research & Development (R&D) tax incentives in Malaysia

  • You may choose one of these incentives:

    • Pioneer Status (PS): 100% income tax exemption on statutory income for 5 years; or

    • Investment Tax Allowance (ITA): 100% of qualifying capital expenditure for 10 years, usable to offset up to 70% of statutory income each year.

  • Only unrelated client companies can claim a double deduction on the payments they make to the R&D service company.

In-house R&D (you do R&D within your own company for your own business)

  • You can get an Investment Tax Allowance (ITA) of 50% of qualifying capital expenditure for 10 years.

  • That ITA can be used to offset up to 70% of statutory income each year.

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