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INVESTMENT INCENTIVES
1. Qualifying
Capital Expenditure for MSC Status Companies
For investment tax allowance (ITA) purposes, the meaning of capital expenditure
in Section 29(7) of the Promotion of Investments Act, 1986 provides a broad
application to what may constitute qualifying capital expenditure for manufacturing,
agriculture, hotel and tourism businesses. To meet the characteristics and peculiarities
of certain businesses, a need may arise for the Minister to determine what would
specifically form qualifying capital expenditure for the purpose of ITA for these
businesses.
Thus, under the Promotion of Investments (Determination of Assets Under Section
29B in respect of MSC Status Companies) Order 2001, which applies to MSC status
companies, the Minister has determined that capital expenditure on the following
assets are capital expenditure qualifying for ITA :-
| a. |
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multimedia and peripheral equipment (software and hardware)
which are used by a MSC status company within the designated Cybercities for the
conduct or development of the promoted activity or the production or development
of the promoted product; |
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| b. |
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the purchase, construction or renovation of a building,
or part of a building, or any combination of those activities, located within the
designated Cybercities where the building or part of the building is solely used
by a MSC status company for the conduct or development of the promoted activity or
the production or development of the promoted product; |
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| c. |
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plant and machinery used by a MSC status company within
Malaysia for the conduct or development of the promoted product; or |
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| d. |
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the landscaping and greening of the surrounding premises
of the building of a MSC status company within Cyberjaya, where the building is solely
used by such MSC status company for the conduct or development of the promoted activity
or the production or development of the promoted product, in line with the MSC physical
planning guidelines and Cyberjaya urban design guidelines. |
For the above Order, "designated Cybercities" means Cyberjaya, Technology
Park Malaysia - Phase I, University Putra Malaysia - Malaysia Technology Development
Corporation Incubator I and the Petronas Twin Towers.
The Order was gazetted on 1st March, 2001 and is deemed to have effect from 25th
October, 1996.
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2. Income Tax
(Promotion of Exports) (Amendment) Rules 2001
With effect from 1st January, 2001, "professional fees incurred in packaging
design on conditions that the foods are of export quality and the company employs
local professional services" have been included as an expense item allowable
for double deduction under the above Rules.
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3. Promoted
Activities and Promoted Products
The Promotion of Investments (Promoted Activities and Promoted Products) Order
2001, has introduced a new list of products and activities for pioneer status
and ITA purposes with effect from 1st January, 2001.
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4. Reinvestment
Allowance - 100% Exemption of Statutory Income for Achieving Productivity Level
Manufacturing companies which achieve the level of productivity as prescribed
by the Minister are eligible for 100% exemption of statutory income (similar to that
given to companies situated within the promoted areas).
The level of productivity as prescribed by the Minister is in relation to the increase
in the process efficiency (PE) achieved by a company for a year of assessment as
compared to the immediate preceding year of assessment. In this respect, a company
is required to show that the PE has increased by at least the same rate as the growth
rate of that particular manufacturing subsector provided by the Treasury. The list
of growth rates of the manufacturing subsectors issued by the DG for year of assessment
2000 (current year basis) is reproduced as follows :-
Manufacturing Sectors
Growth Rate for Year of Assessment 2000 (Current Year Basis)
| NO |
SUBSECTOR |
% GROWTH |
| 1. |
Food |
13.9 |
| 2. |
Beverages |
6.0 |
| 3. |
Tobacco |
75.3 |
| 4. |
Textiles |
1.7 |
| 5. |
Wearing Apparel |
20.7 |
| 6. |
Footwear |
83.9 |
| 7. |
Petroleum Refineries |
16.4 |
| 8. |
Industrial Chemical |
6.8 |
| 9. |
Other Chemical Products |
11.6 |
| 10. |
Plastic Products |
27.2 |
| 11. |
Paper and Paper Products |
15.0 |
| 12. |
Rubber Products |
4.1 |
| 13. |
Wood Products |
4.0 |
| 14. |
Non Metallic Mineral Products |
21.5 |
| 15. |
Glass and Glass Products |
12.6 |
| 16. |
Iron and Steel |
20.2 |
| 17. |
Non Ferrous Metal Products |
6.5 |
| 18. |
Fabricated Metal Products |
33.7 |
| 19. |
Electrical and Electronic Products and Machinery |
40.5 |
| 20. |
Professional and Scientific and Measuring and Controlling
Equipment |
14.6 |
| 21. |
Miscellaneous Product of Coal and Petrol |
32.5 |
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TOTAL MANUFACTURING |
25.0 |
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