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Extension of Tax Incentives for the Aerospace Industry

Updated: Nov 9, 2022

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Background to the Aerospace Industry

Strategically located at the heart of the wider Asia-Pacific region, Malaysia sits within the world’s largest air travel market and has world-class infrastructure such as the KLIA Aeropolis, Subang Aerotech Park, Senai Aerospace Park, Serendah High-Value Manufacturing Park and Kulim Hi-Tech Park.

Together with its business-friendly Government, supportive industry policies, diversified manufacturing base, and widely available industry talent, the country is a cost-effective location for projects.

The Malaysian Government considers the industry a catalytic high-value industry under its 11th Malaysia Plan (11MP), which runs from 2016 to 2020.

To that end, they have emphasised the development of the aerospace industry, its supply chain, and competency through industry-led research and technology (R&T).

On top of the 11MP initiatives, the Government has also implemented the Malaysian Aerospace Industry Blueprint 2030 (MAIB 2030) to help drive the industry’s growth.

Underscoring the Asia-Pacific region’s air travel market growth, The Boeing Company predicts that demand for planes will pick up over the next decade, with the region needing almost 17,485 planes.

The region will also account for 39% of global deliveries of passenger and freight planes over the same period. With 40% of aerospace industry growth coming from Asia-Pacific alone and a collective GDP of four ASEAN countries exceeding US$1 trillion by 2030, the industry's future is in Asia.

Malaysia is targeting to capture 50% of the Southeast Asian MRO business and five% of the global market by 2030, positioning the country as Southeast Asia’s top aerospace hub. Subang Aerotech Park, which offers a competitive cost base, is the largest MRO centre in the country, with both local and global service providers.

Current Position

New and existing aerospace companies in Malaysia undertaking high-value activities such as manufacturing or assembling of systems, devices, parts or components and maintenance, repair and overhaul for aircraft (MRO), systems, devices, parts or components and engineering & design/services related are given tax incentives as follows

New Company

  1. income tax exemption of 70% to 100% for a period between 5 to 10 years; or

  2. Investment Tax Allowance of 60% to 100% for 5 years and can be set off against 70% to 100% of statutory income for each assessment year.

Existing Company

An Investment Tax Allowance of 60% for a period of 5 years and can be set off against 70% of statutory income for each year of assessment

For applications received by the Malaysian Investment Development Authority (MIDA) until 31 December 2022.

Aerospace Industry in Malaysia:

176.1 Aerospace Industry
Download PDF • 24.16MB


In line with the 12th Malaysia Plan to transform Malaysia as a regional key player in the aerospace industry, the proposed tax incentive will be extended for 3 years.

Effective Date
  • For applications received by MIDA from 1 January 2023 until 31 December 2025.

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