We are delighted to share pivotal news from the 2023 Malaysian Budget Speech delivered by our esteemed Prime Minister and Minister of Finance, Dato’ Seri Anwar Ibrahim, on 24 February 2023. Among the noteworthy announcements made during this event was the introduction of tax incentives aimed at promoting the production of electric vehicle charging equipment to revolutionise our nation's approach to sustainable transportation.
The Malaysian Investment Development Authority ("MIDA"), acting in alignment with this visionary directive, has recently released the "Guideline and Procedures for the Application of Tax Incentive for Manufacturer of Electric Vehicle Charging Equipment," hereafter referred to as "the Guideline."
Let's delve into the essence of this groundbreaking initiative:
Tax Incentives: The Guideline introduces substantial tax incentives aimed at both new companies and existing entities venturing into expansion and diversification within the electric vehicle charging equipment manufacturing sector.
These incentives encompass:
100% Income Tax Exemption: New entrants enjoy complete income tax exemption from the year of assessment (YA) 2023 until YA 2032. Early investors stand to benefit from a decade-long tax exemption, while those investing post-YA 2023 are entitled to the remaining exemption period. Additionally, unabsorbed losses can be carried forward for seven consecutive year of assessment.
Income Tax Exemption equivalent to Investment Tax Allowance of 100%: Companies can opt for a 100% income tax exemption, equivalent to the investment tax allowance. This covers qualifying capital expenditure within a five-year timeframe, and the allowance can be offset against 100% of statutory income for each YA. Unutilized allowances can be carried forward until fully utilised.
The Guideline further outlines that existing companies expanding into this domain must transform by entering a sector distinct from their current operations. This shift ensures innovation and diversification within electric vehicle charging equipment manufacturing.
Eligibility Criteria: Companies seeking these tax incentives must fulfil specific criteria, including:
Incorporation under the Companies Act 2016.
Possession of a manufacturing license from the Ministry of International Trade and Industry (MITI) or a relevant exemption from MIDA.
Substantial investment and operational expenditures for the proposed project.
Maintaining a workforce comprised of at least 80% Malaysians.
Achieving a minimum of 20% value added for their product(s).
Meeting Science and Technical Staff Index (S&T Index) requirements.
Collaborative engagement with local vendors, fostering technological advancements, certification, and human capital development.
Offering Malaysian internships, particularly at technical and vocational education and training (TVET) levels, or collaborating with relevant educational institutions.
Relevant Legislation: The tax incentives specified in the Guideline are covered by the :
Income Tax (Exemption) (No. 11) Order 2006 [P.U.(A) 112/2006]; and
Income Tax (Exemption) (No. 12) Order 2006 [P.U.(A) 113/2006].
The National Committee of Investment will thoughtfully consider all applications.
Application Period: To avail of these incentives, companies must submit their applications to MIDA between 25 February 2023 and 31 December 2025.
The application should be made online at https://investmalaysia.mida.gov.my.
Application with incomplete information will not be accepted and will be returned to the applicant company.
This marks a significant step in our journey towards sustainable and eco-conscious transportation. Together, we can pave the way for a cleaner, greener, and brighter future for Malaysia.
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