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Introduction of New Schedule for Reinvestment of Hotel and Selected Tourism Projects under ITA 1967

Updated: Nov 9, 2022

To Download Budget 2023 Speech and some other related publications - https://t.me/YourAuditor/3276

Current Position

Under Schedule 7A of the Income Tax Act of 1967, the manufacturing industry and certain agricultural sectors are eligible for the Reinvestment Allowance (RA) on:

  • expansion,

  • diversification,

  • modernisation; and

  • automation.

The RA is granted at a rate of 60% on qualified capital expenditures for a period of 15 consecutive years, and it can be set off against 70% of statutory income.



This RA can be claimed via the Income Tax Return Form, making it easier for businesses to take advantage of tax incentives.


Under ITA 1967, the services sector is not eligible for a reinvestment allowance.

Proposal

It is suggested that a new schedule for reinvestment of hotels and selected tourism projects under ITA 1967 be introduced and given RA at 60% on qualifying capital expenditure for 5 years consecutively, to be set off against 70% of statutory income, to revive the services sector, particularly tourism affected by the COVID-19 pandemic.


The following renovation, expansion, and modernisation activities are eligible for this tax incentive:


  1. 1 to 5-star hotels registered with the Ministry of Tourism, Art and Culture (MOTAC); and

  2. selected tourism projects, namely theme parks and convention centres with a capacity of at least 3000 participants and registered with MOTAC.

This RA can be claimed through the Income Tax Return Form.

Effective Date

From the year of assessment 2023 until the year of assessment 2027.




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