The Income Tax (Exemption) (No. 10) 2018 (Amendment) Order 2024 [P.U. (A) 84/2024] amends the Income Tax (Exemption) (No. 10) Order 2018, which provides tax exemptions for qualifying companies with Multimedia Super Corridor (MSC) status in Malaysia.
The amendments are deemed to have come into effect on 1 January 2019, except for certain subparagraphs that are effective from 25 March 2022.
Key points from the amended order:
1. Qualifying companies are those incorporated under the Companies Act 2016, resident in Malaysia, and awarded MSC status by the Government of Malaysia on or after 1 January 2019.
2. The order introduces the concept of "core income generating activities," which are activities undertaken by qualifying companies in Malaysia to provide services related to promoted activities for MSC, as approved under the award of MSC status and by the Minister.
3. If a qualifying company has a related company that has been granted an exemption for the same core income generating activities, the qualifying company will not be eligible for the exemption.
4. The Minister may allow a qualifying company to surrender the exemption granted under this order, subject to certain conditions.
5. Existing qualifying companies with MSC status awarded before 1 January 2019 may continue to enjoy the tax exemption for an extended period of five years, subject to meeting specific requirements.
Advice for businesses:
1. Companies interested in applying for MSC status should carefully review the eligibility criteria and application process, as outlined in the amended order.
2. Qualifying companies should ensure that their core income generating activities are in line with the promoted activities for MSC and have been approved under the award of MSC status and by the Minister.
3. Companies should be aware of the provisions related to related companies and the potential impact on their eligibility for tax exemptions.
4. Existing qualifying companies with MSC status should assess their eligibility for the extended five-year exemption period and ensure compliance with the specified requirements.
5. Companies should seek professional advice to understand the implications of the amended order on their specific business circumstances and to ensure compliance with the relevant provisions.
By understanding the key amendments and provisions of this order, businesses can make informed decisions regarding their MSC status applications, core income generating activities, and tax planning strategies.
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