Gazette Order on Tax Incentives for the Relocation of Services to Malaysia

The Income Tax (Relocation of Provision of Services Business Incentive Scheme) Rules 2022 have been gazetted and are effective from YA 2021.

The incentive is available for companies relocating their manufacturing operations to Malaysia and undertaking new investments. It has first been announced under the National Economic Recovery Plan (PENJANA). The incentive was then expanded to companies operating in selected service sectors, including those adopting Industrial Revolution 4.0 and digitalization technology.

Salient points to note from the Gazette Order include:

Employment of at least 80 percent of full-time Malaysian employees on or before the 3rd year from the date of the first invoice in relation to the qualifying activity issued by the qualifying company until the end of the tax incentive period; and
Incurrence of an approved adequate amount of annual operating expenditure to carry on the qualifying activity or an approved adequate investment in fixed assets to carry on the qualifying activity.

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