Updated on 15 July 2023 - Dialogue between MOF， LHDNM， and CTIM [21/6/2023]Malaysia's national budget for 2023 was re-tabled again in February 2023; for more info, please visit - https://www.ccs-co.com/post/budget-2023-malaysia-madani.
The Ismail Sabri Government Budget is no longer applicable. Therefore, these tax incentives included in Budget 2023, tabled in Parliament on 7 October 2022, were not included in Budget 2023 (Re-tabled) on 24 February 2023.
The good news is that based on the response from MOF (Ministry of Finance), these incentives will be reviewed during Budget 2024.
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) are included within 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 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 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.
The proposal under Ismail Sabri Government Budget [But these tax incentives included in Budget 2023, tabled in Parliament on 7 October 2022, were not included in Budget 2023 (Re-tabled) on 24 February 2023.]
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:
ITA of 60% for solar activity; and ITA of 100% for activity other than solar, including Battery Energy Storage System (BESS);
tax incentive period be extended from 3 years to 5 years for selected projects; and
application period for tax incentives is extended for two years.
The details of tiering approach for GITA and GITE, as in SCHEDULE 1, as below:-
Effective Date
These tax incentives included in Budget 2023, tabled in Parliament on 7 October 2022, were not included in Budget 2023 (Re-tabled) on 24 February 2023. Therefore, it is no longer relevant.
For applications received by MIDA from 1 January 2024 until 31 December 2025.
Updated on 15 July 2023- Dialogue between MOF， LHDNM， and CTIM[21/6/2023]
CTIM would like to know when the government will issue the Income Tax Exemption Order (GITE) so that the taxpayers can claim the tax incentive.
LHDNM's Feedback:
The draft exemption order is currently in the process of being gazetted.
Update on the status: Green Investment Tax Allowance (“GITA”)
On the extension of 100% Investment Tax Allowance to the YA 2023 on qualifying capital expenditure incurred for green technology activities.
LHDNM's Feedback:
Various technical and legal parties are reviewing the draft exemption order, namely MOF, AGC, LHDNM, MGTC, and MIDA.
A discussion was held on 18 April 2023 between MOF, AGC, and LHDNM to address issues and questions raised by AGC regarding the draft GITA Asset.
The drafts for GITA Asset, GITA Project, and GITA Green Building are currently in the process of being gazetted with AGC.
Update on the status: Green Income Tax Exemption (“GITE”)
Extension of income tax exemption of 70% of statutory income for qualifying green technology services to the YA 2023; and
Income tax exemption of 70% of statutory income up to 10 years of assessment for solar leasing companies certified by the Sustainable Energy Development Authority (“SEDA”).
LHDNM's Feedback:
The draft exemption order is currently in the process of being gazetted with AGC.
Update on the status: Extension of the list of qualifying assets from nine to forty in the MyHIJAU directory for green investment tax allowance (“GITA”).
LHDNM's Feedback:
A discussion was held on 18 April 2023 between MOF, AGC, and LHDNM to address issues and questions raised by AGC regarding the draft GITA Asset.
The draft exemption order is currently in the process of being gazetted with AGC.
MOF's Feedback:
Various technical and legal parties are currently reviewing the draft exemption order, namely MOF, AGC, LHDNM, and MGTC.
Update on the status: Investment tax allowance for the purchase of green technology equipment and tax exemption on the use of green technology systems be granted
LHDNM's Feedback:
A discussion was held on 18 April 2023 between MOF, AGC, and LHDNM to address issues and questions raised by AGC regarding the draft GITA Asset.
The draft exemption order is currently in the process of being gazetted with AGC.
MOF's Feedback:
Various technical and legal parties are reviewing the draft exemption order, namely MOF, AGC, LHDNM, and MGTC.
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