Malaysia

New Incentive Framework 

A New Incentive Framework has been implemented for the manufacturing sector from 1 March 2026, while for the services sector is expected to be implemented in 2026. The framework focuses on high-value activities as opposed to a product-based approach. (See the Tax credits and incentives section for more information)

Johor-Singapore Special Economic Zone and Forest City Special Financial Zone tax incentives

On 7 January 2025, Malaysia and Singapore formally entered into an agreement to establish the Johor-Singapore Special Economic Zone (JS-SEZ). The JS-SEZ is a special economic zone aimed at capitalising on the existing synergies between Johor and Singapore to unlock greater economic potential, whilst the Forest City Special Financial Zone (’Forest City SFZ’) is located within the JS-SEZ and comprises four man-made islands. The tax incentive packages available are as follows (see the Tax credits and incentives section for more information):

For JS-SEZ:

• Global Services Hub.
• Smart Logistics Complex.
• Manufacturing of downstream specialty chemicals incentive.
• Manufacturing business incentive.
• Integrated tourism project incentive.

For Forest City SFZ:

• Global Services Hub.
• Smart Logistics Complex.
• Relocation of service incentive.

New Industrial Master Plan 2030: Reinvestment incentives

The reinvestment incentive under the New Industrial Master Plan 2030 (NIMP 2030) was introduced with the objective to encourage existing companies that have exhausted their reinvestment allowance incentive period to continue to invest in high-growth and high-value activities under the NIMP 2030. The following reinvestment incentives are provided to existing manufacturing companies undertaking expansion or diversification projects, which adopts Industrial Revolution 4.0 (IR 4.0) technologies: 

• Tier 1 - Investment tax allowance (ITA) of 100% of qualifying capital expenditure (QCE) incurred within five years to be utilised against 100% of statutory income, or 
• Tier 2 - ITA of 60% of QCE incurred within five years to be utilised against 70% of statutory income.

Applications can be submitted from 1 January 2024 to 31 December 2028.

Global minimum tax (GMT)

The GMT Rules based on the Organisation for Economic Co-operation and Development (OECD) Pillar Two, as well as the qualified domestic minimum top-up tax (QDMTT), came into effect for financial years commencing on or after 1 January 2025. To mitigate the impact of GMT, the government is committed to streamlining the existing incentives, creating new non-tax incentives, and exploring the feasibility of investment tax credits.

e-Invoicing

e-Invoicing was introduced in Malaysia in phases beginning from 1 August 2024. To date, taxpayers with annual turnover exceeding MYR 5 million have fully implemented e-Invoicing. Taxpayers with annual turnover of up to MYR 5 million are due to complete implementation by 31 December 2027. Taxpayers with annual turnover below MYR 1 million are eligible for exemption.