Malaysia announced a series of tax incentives as part of a post-Covid-19 stimulus package, including a 10-year 0% tax rate on certain new investments from foreign manufacturers.
The package includes a 15% tax rate for new investments in the manufacturing sector for 15 years for companies with fixed assets exceeding RM500 million ($117 million) and above. Malaysia’s usual headline corporate tax rate for non-resident companies is 24%.
“This incentive is provided if the company transfers the location and commences operations within one year from the date of approval and the investment amount involved must be made within three years,” Muhyiddin Yassin, Prime Minister of Malaysia, said in a speech Friday.
The government will send its stimulus package to Parliament in July.
Other incentives in the package include a tax rebate for start-ups of up to RM20,000 annually for the first three years after a company is formed.
In a bid to boost corporate M&A activity, the government also proposed a stamp duty exemption for transactions completed between July 1, 2020, and June 30 2021.
The package also includes a 100% tax exemption on the sale of domestic passenger cars, and 50 percent for imported passenger cars from June 15 to Dec. 31.
The prime minister also announced that the government will withdraw its tourism tax from July 1 to June 30. It will also extend a service tax exemption for accommodation companies from Sept. 1 to June 30, 2021.