Green Technology Tax Incentives for Business Purposes and Solar Leasing Projects

The Malaysian Investment Development Authority (MIDA) has recently issued the latest guidelines on applications for the Green Technology Incentives:

Green Investment Tax Allowance (GITA) Projects for Business Purposes; and
Green Income Tax Exemption (GITE) Solar Leasing.

Under the revised guidelines, the qualifying activities for the GITA project for business purposes are expanded to cover new green technology projects such as green hydrogen, electric vehicle charging stations and renewable energy sourced from wind energy.

GITA for Business Purposes

Below please find the tiered-based approach for GITA percentages:

Qualifying Activities	Percentage of GITA on qualifying capital expenditure incurred	Percentage of statutory income to be set off	Incentive Period
Tier 1: Green hydrogen	100 %	100 % or 70 %	up to 10 years
Tier 2: Integrated waste management Electric vehicle charging station	100 %	100 %	5 years
Tier 3: Generation of energy from renewable sources	100 %	70 %	5 years

To qualify for the tax incentives, the following criterias must be met:

the company must be a new or existing tax-resident company, locally incorporated, subject to conditions;
the date of the first qualifying capital expenditure must not be incurred earlier than the application receipt date by MIDA, except for green hydrogen projects;
for renewable energy projects, green technology assets refer to green technology product equipment or systems and are limited to new assets only;
companies within the same group undertaking the same green qualifying activities can qualify for the tax incentives, subject to conditions;
the incentives will not apply to companies claiming a reinvestment allowance, other incentives under the Promotion of Investment Act 1986, or others, within the same basis period for a year of assessment; and
the approved company must submit an application for determination of the tax incentive's effective date to MIDA no later than 24 months from the approval letter date.

GITE for Solar Leasing

Please find the tiered-based approach for GITE for solar leasing below:

Tier	Tax Exemption on Statutory Income	Incentive Period
Tier 1: >10 MW - ≤30 MW	70 %	10 years
Tier 2: >3 MW - ≤10 MW	70 %	5 years

To qualify for the tax incentive, the following criterias must be met:

the company must be a new or existing tax-resident company, locally incorporated, subject to conditions;
the application for the tax incentive must be submitted along with a verification letter from the Sustainable Energy Development Authority (SEDA) within 12 months of the verification letter from SEDA, and before the issuance of the first sales invoice for the proposed project;
only one company within the same group is eligible for GITE solar leasing; and
the approved company must submit an application for determination of the tax incentive's effective date and ensure compliance with all conditions, as verified by an external auditor to SEDA, no later than 24 months from the date of the approval letter.