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Review of Tax Incentive for Equity Crowdfunding

Updated: Nov 9, 2022

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

Current Position

In Budget 2021, individual investors who invest in equity crowdfunding platforms approved by the Securities Commission (SC) will be allowed a tax exemption for a specified amount of aggregate income.


The proposal has been legislative under the Income Tax (Exemption) (No 4) Order 2022.


Under the Order, 50% of the amount invested for each year of assessment will be deductible against the individual’s aggregate income, subject to the conditions as follows:


  1. the eligible amount for tax exemption is limited to RM50,000 each year of assessment;

  2. the deductible amount is limited to 10% of the aggregate income for that year of assessment. The excess amount will be disregarded;

  3. the Securities Commission Malaysia must verify the investor, investee company and amount of investment made;

  4. the investor must not have any family relationship with the investee company;

  5. the investment must be made through an equity crowdfunding platform approved by the Securities Commission Malaysia; and

  6. the investment is not allowed to be disposed of within 2 years from the date of investment.

The tax incentive is for investments made from January 1, 2021, until December 31, 2023.

Proposal

To attract more individual investors to invest in start-up companies through equity crowdfunding, it is proposed tax incentives be reviewed as follows:


  • scope of tax incentives be expanded to include investments made by individuals investor through Limited Liability Partnership Nominee Company; and

  • the investment period to be extended for 3 years.

Effective Date

For investment made from 1 January 2024 until 31 December 2026.



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