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Income Tax (Exemption) (No. 2) Order 2023: Existing Principal Hub

Updated: Aug 25, 2023


Here is an announcement covering the critical information from the Income Tax (Exemption) (No. 2) Order 2023 [P.U. (A) 251/2023], which is deemed to have effect from the year of assessment 2019. A principal hub referred to under this Order is a company which—

  1. is incorporated under the Companies Act 2016 [Act 777] and resident in Malaysia;

  2. is already operating in Malaysia, which—

    1. does not have an operational headquarters, international procurement centre or regional distribution centre status; or

    2. has been approved by the Minister as having an operational headquarters, international procurement centre or regional distribution centre status; and—

      1. (A) has been approved incentive for operational headquarters, international procurement centre or regional distribution centre; or

      2. (B) has not been approved incentive for operational headquarters, international procurement centre or regional distribution centre; and

  3. has a paid-up capital of more than two million five hundred thousand ringgit.


The government has introduced a tax exemption incentive for principal hubs undertaking qualifying services or trading activities.


Key Highlights:

  • Principal hubs can apply for a 5-year tax exemption on statutory income from specified activities.

  • Applies to hubs providing qualifying services like regional management, R&D, logistics, procurement, distribution, etc.

  • It also covers hubs doing qualifying trading activities related to their supply chain.

  • Minimum operating expenditure and headcount conditions must be met.

  • Qualifying principal hubs get a 100% tax exemption on statutory income from specified activities.

  • Income from intellectual property is excluded from the exemption.

  • Operational headquarters, international procurement centres and regional distribution centres may also qualify.

  • Applications must be submitted to MIDA from 1 Jan 2019 to 31 Dec 2020.

This special incentive aims to spur the establishment and growth of principal hub operations in Malaysia. Interested companies that meet qualifying criteria should apply soon to benefit from the tax savings.

Reference:-

We'd like to encourage readers to download the Income Tax (Exemption) (No. 2) Order 2023 attached below and read the whole context better to understand the incentive's specifics and qualifying conditions.


210.1 Income Tax (Exemption) (No. 2) Order 2023 [PUA 251_2023]
.pdf
Download PDF • 742KB

The full legal text provides essential details that scopes that we cannot cover, so downloading the Order directly will allow interested companies to evaluate the incentive's applicability based on their circumstances thoroughly.

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