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Review of Green Technology Tax Incentives

Updated: Nov 9, 2022

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

Current Position

There are currently incentives for green technology, including:

  • the Green Investment Tax Allowance for qualifying green activities, and

  • the Green Investment Tax Exemption for qualifying green services and solar leasing activities.

In Budget 2020, green technology tax incentives have been extended until 31 December 2023. Meanwhile, in Budget 2022, Rainwater Harvesting Systems (RHS) be included within the scope of Qualifying Green Services and Qualifying Green Assets.


1. Green Investment Tax Allowance (GITA)

  • Investment Tax Allowance (ITA) of 100% on capital expenditure for qualifying green activity for a period of 3 years.

  • This allowance can be set-off against 70% of statutory income.


2. Green Income Tax Exemption (GITE)

  • income tax exemption of 70% on statutory income for qualifying green services activities for a period of 3 years of assessment; and

  • income tax exemption of 70% on statutory income for up to 10 years for solar leasing activities.

The tax incentive is for applications received by the Malaysian Investment Development Authority (MIDA) from 1 January 2020 until 31 December 2023.


Proposal

As a continuous support for green technology development initiatives in line with the Green Technology Master Plan 2017-2030, it is proposed tax incentives for qualifying green activities under GITA and GITE be reviewed based on tiering approach as follows:

  1. ITA of 60% for solar activity; and ITA of 100% for activity other than solar including Battery Energy Storage System (BESS);

  2. tax incentive period be extended from 3 years to 5 years for selected project; and

  3. application period for tax incentive be extended for 2 years.

The details of tiering approach for GITA and GITE as in SCHEDULE 1 as below:-


Effective Date

For applications received by MIDA from 1 January 2024 until 31 December 2025.



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