Malaysia

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

Malaysia will be implementing the global minimum tax based on the Organisation for Economic Co-operation and Development (OECD) Pillar 2, as well as the qualified domestic minimum top-up tax (QDMTT), in the year 2025. The Global Minimum Tax Rules will come into effect from financial years commencing on or after 1 January 2025.

Capital gains tax (CGT)

Companies, limited liability partnerships (LLPs), co-operatives, and trust bodies are subject to CGT from 1 January 2024 on:

• Gains from disposal of:
• Shares in unlisted companies incorporated in Malaysia.
• Shares in a foreign incorporated company deriving value from real property in Malaysia.
• Gains from disposal of all types of capital assets situated outside Malaysia, remitted into Malaysia.

However, exemption is given for:

• Gains from disposal of shares in unlisted companies incorporated in Malaysia or shares in foreign incorporated companies deriving value from real property in Malaysia, made on or after 1 January 2024 to 29 February 2024. The exemption does not apply where the gains are treated as business income.
• Gains from disposal of all types of capital assets situated outside Malaysia (excluding intellectual property [IP] rights), which is received in Malaysia from 1 January 2024 to 31 December 2026, by companies, LLPs, co-operatives, and trust bodies resident in Malaysia that meet economic substance requirements.

See the Income determination section for more information.

High value goods tax

A high value goods tax is expected to be introduced at the rate of 5% to 10% on certain high-value items, such as jewellery and watches, based on the threshold of price. The implementation date was proposed to be on 1 May 2024. Its implementation has since been deferred to allow the government to carry out engagement sessions with the relevant stakeholder groups to finalise the details of the high value goods tax.

Increase in service tax rate from 6% to 8%

Effective from 1 March 2024, the service tax rate has increased from 6% to 8% for all taxable services previously subject to tax at 6%, except for:

• Provision of food and beverage services.
• Telecommunication services.
• Parking services.
• Logistics services.

e-Invoicing

The government is in the process of implementing e-Invoicing. The implementation will be carried out in stages as follows:

• 1 August 2024: Mandatory implementation for taxpayers with an annual turnover or income in excess of 100 million Malaysian ringgit (MYR).
• 1 January 2025: Mandatory implementation for taxpayers with an annual turnover or income in excess of MYR 25 million to MYR 100 million.
• 1 July 2025: Mandatory implementation for all other categories of taxpayers.