What Is the 4th Industrial Revolution (4IR)?
What exactly is meant by the phrase "the Fourth Industrial Revolution," and why should you be concerned about it?
The convergence of the physical, digital, and biological worlds are referred to as the "Fourth Industrial Revolution," and it is a term that has been used to describe this phenomenon.
It is a combination of recent developments in Artificial Intelligence (AI), robots, the Internet of Things (IoT), machine to machine (M2M), genetic engineering, quantum computing, and other technology areas. It is the conglomerate force underlying many different products and services that are rapidly becoming essential to modernity.
Think of GPS systems that suggest the quickest route to a destination, voice-activated virtual assistants such as Apple's Siri, personalised Netflix recommendations, and Facebook's ability to recognise your face and tag you in a photo taken by a friend.
All of these technologies are examples of the advancements in artificial intelligence that are currently available.
Income Tax (Deduction for Expenditure in relation to Industry4WRD Vendor Development Programme) Rules 2022
It was suggested in Budget 2019 that anchor companies that develop local vendors will be granted a double deduction on expenses paid in the implementation of the Industry4WRD Vendor Development Programme.
This is in support of the aims and goals that have been set forth by Industry4WRD.
As a result of this,
On 30 May 2022, the Minister, in the exercise of the powers conferred by paragraph 154(1)(b) read together with paragraph 33(1)(d) of the Income Tax Act 1967 [Act 53], gazetted the Income Tax (Deduction for Expenditure in relation to Industry4WRD Vendor Development Programme) Rules 2022 and is effective from YA 2019.
[P.U (A) 172].
Industry4WRD (Industry Forward) Vendor Development Programme
The Industry4WRD (Industry Forward) Vendor Development Programme is a programme certified by the Ministry of International Trade and Industry (MITI) to be implemented by an anchor company in developing a vendor company as specified in the Guideline for The Implementation of Industry4WRD Vendor Development Programme issued or as revised by the ministry and approved by the Minister.
According to the Rules, an anchor company is eligible for a double deduction for any qualified operating expenditures that it incurs, up to a maximum of MYR 1 million per year, for a period of three consecutive years of assessment.
Double Tax Deduction The following types of Qualifying expenditures are eligible for a double deduction if a Qualified Anchor Company incurred them:
Activities concerning Product Development, specifically product quality upgrading, product innovation, or research and development;
Activities concerning Capability Upgrading, specifically certification programme, assessment programme, or business process re-engineering; or
Activities concerning Human Capital, specifically hard skill training, lean management system, financial management practice, or capacity upgrading.
Capital Expenditures on the plant, machinery, fixtures, land, premises, buildings, structures, or works of a permanent nature, or on alterations, additions, or extensions thereof, or in the acquisition of any rights in or over any property, incurred by the anchor company, do not count as qualifying expenditures.
means a company:-
which is incorporated or deemed to be registered under the Companies Act 2016;
which is resident in Malaysia;
which engages in manufacturing or manufacturing-related services sector; and
which fulfils other conditions as specified in the Guideline for The Implementation of Industry4WRD Vendor Development Programme issued or as revised by the ministry charged with the responsibility for international trade and industry and approved by the Minister.
Qualified Anchor Company means Anchor Company which is :
incorporated under the Companies Act 2016 [Act 777];
resident in Malaysia;
engages in manufacturing or manufacturing-related services sector;
holds a business license issued by the relevant local authority and a manufacturing license issued by the Ministry of International Trade and Industry (MITI), if relevant;
has been in operation for a period of at least 36 months;
participates in the Industry4WRD Vendor Development Programme;
fulfils other conditions as specified in the Guideline for The Implementation of Industry4WRD Vendor Development Programme.
This incentive is eligible for memorandums of understanding executed between anchor companies and the MITI between January 1, 2019, and December 31, 2021.