Malaysia Budget 2001
Malaysia Budget 2001
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PROMOTION OF INVESTMENTS

Incentive to Promote Export of Publishing and Information and Communicative Technology Services
   
Incentive for Utilising Biomass as a New Source of Energy
   
Incentive for Companies Providing Cold Chain Facilities and Services for Food Products  
   
Extension of Incentives for Promoted Areas  




1. Incentive to Promote Export of Publishing and Information and Communications Technology (ICT) Services

Companies which export Malaysian services are given an exemption of their statutory income equivalent to 10% of the value of increase in exports. Presently, only companies in the following services sectors are eligible for this incentive :-

a. legal b. accounting
c. engineering consultancy d. architecture
e. marketing f. business consultancy
g. office services h. construction management
i. building management j. plantation management
k. private healthcare l. private education


As a measure to promote other services which have high export potentials, the Minister of Finance has proposed in his Budget Speech that the present incentive for promoting export of services be extended to include publishing services and ICT services.

The proposal is to be effective from year of assessment 2001.

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2. Incentive for Utilising Biomass as a New Source of Energy

Currently, the Government is adopting a 4 fuel strategy that is water, oil, gas and coal to generate electricity supply in the country. To further diversify the energy sources, the Government is promoting biomass as a new energy source which is renewable and environmental friendly.

To encourage the generation of energy using biomass, it is proposed that companies which undertake such activities be given the following incentives :-

a. Income tax exemption of 70% on statutory income for 5 years or Investment Tax Allowance of 60% on capital expenditure incurred within a period of 5 years which is to be utilised against 70% of statutory income; and
   
b. Import duty and sales tax exemption on machinery and equipment used in the project that are not produced locally. For machinery and equipment that are produced locally, sales tax exemption will be given.


These incentives are applicable for applications received from 28th October 2000 until 31st December 2002 on condition that the project is implemented within 1 year from the date of approval.

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3. Incentive for Companies Providing Cold Chain Facilities and Services for Food Products

The availability of cold room and refrigerated truck facilities and related services will prolong the shelf life of locally produced perishable food products. This will assist farmers in obtaining a more reasonable price and help stabilise prices of food products in the market.

Currently, companies providing cold room and refrigerated truck facilities and related services such as collection and treatment of locally produced perishable food products are not given any tax incentive.

To encourage companies to provide such facilities, it is proposed that the following incentives be given :-

a. Pioneer Status with exemption of 70% on statutory income for a period of 5 years; or
b. Investment Tax Allowance of 60% on capital expenditure incurred within 5 years to be deducted against 70% of statutory income.


These incentives are effective from 28th October 2000.

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4. Extension of Incentives for Promoted Areas

Currently, manufacturing, agricultural and tourism projects located in certain promoted areas enjoy enhanced tax incentives. The promoted areas are the Eastern Corridor of Peninsular Malaysia, Sabah and Sarawak. Such incentives which will expire on 31st December 2000 are as follows :-

a.

(i)

Pioneer Status with exemption of 85% of statutory income for a period of 5 years as compared to 70% exemption for projects located outside the promoted areas; or
 

(ii)

Investment Tax Allowance (ITA) of 80% on qualifying capital expenditure to be utilised against 85% of statutory income as compared to ITA of 60% to be utilised against 70% of statutory income for projects located outside the promoted areas; and
b. 100% Infrastructure Allowance on capital expenditure incurred for the provision of infrastructure such as bridges, roads or ports.


To accelerate the development of the promoted areas, it is proposed that the current incentives be extended for another 5 years until 31st December 2005.

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© October 2000