1. PIONEER STATUS

A company given Pioneer Status will be granted partial exemption from the payment of income tax. It will only have to pay tax on 30% of its statutory income. The period of tax exemption is 5 years, commencing from the production date as determined by the Ministry of International Trade and Industry.

However, companies in Sarawak will enjoy 100% of the exemption on statutory income for 5 years.

For strategic projects in hi-tech industries with heavy capital investment, high R&D content or intensive linkages a 100% exemption may be granted.

2. INVESTMENT TAX ALLOWANCE (ITA)

A company given Investment Tax Allowance will be granted an allowance of 60% in respect of qualifying capital expenditure incurred within 5 years from the date of approval of the project. The ITA can be offset against 70% of the statutory income in the year of assessment. Unutilised allowance can be carried forward to subsequent years until the whole amount has been used up. 30% of the statutory income will be taxed at the prevailing company tax rate.

However, companies in Sarawak will be granted an allowance of 100% in respect of the qualifying capital expenditure incurred. The allowance can be utilised to set-off against 100% of the statutory income in the year of assessment.

3. REINVESTMENT ALLOWANCE (RA)

Reinvestment Allowance (RA) is granted to manufacturing companies, which have been in operation for at 12 months and incur qualifying capital expenditure for the expansion of production capacity, modernisation and upgrading of production facilities, and diversification into related products and automation of production facilities.

The RA is in the form of an allowance of 60% of capital expenditure incurred for the expansion, modernisation and upgrading of production facilities and diversification into related products. The allowance can be utilised to offset against 70% of the statutory income in the year of assessment.

4. SPECIAL ADDITIONAL INCENTIVES FOR MANUFACTURING PROJECTS IN SARAWAK

• Companies eligible for Pioneer Status in Sarawak will be granted tax exemption of 100% (normally 70%) of their statutory income.
• For companies eligible for Investment Tax Allowance, rate of allowance will be increased to a maximum 100% (normally 75%) of the statutory income.
• Second round of pioneer status for existing and new companies.
• Selected industries located in Sarawak can be granted incentives (i.e. Pioneer Status or Investment Tax Allowance, which are no longer given for products manufactured in other parts of Malaysia.
• Infrastructure allowance of 100% of qualifying expenditure.
• Manufacturing projects in Sarawak catering for domestic market are also entitled for full import duty exemption on raw material, components and parts, which are not available in Sarawak.
• Eligibility for double deduction on freight charges incurred for the export of rattan and wood-based products (except plywood, sawn timber and veneer).
• Cheap industrial land. Current price from RM2.50.*
• Low down payment for the purchase of industrial land.
• Flexible terms of payment for the purchase of industrial land.*

* Subject to Change

For more detailed information on manufacturing incentives and applications, please contact MID, Sarawak or MIDA office.