CORPORATE TAXES
4. Venture capital company-Gains derived by an approved venture capital company arising from the disposal of shares in a venture company are exempt from tax. If the venture company is listed on the Kuala Lumpur stock Exchange (KLSE), the tax exemption will apply only to disposals within three years from the date of the first listing on the KLSE. Such exempt gains are available for distribution to shareholders as tax -exempt
dividends. A loss arising from the disposal of shares in a venture company or upon liquidation of a venture company is deductible against other income of the venture capital company, and any unutilized losses are available to be carried forward to subsequent years.
A venture capital company is a Malaysia incorporated company approved by the Minister of Finance that invests at least 70% of its funds in shares of a venture company that is not listed on the KLSE at the time of acquisition. A venture company is a Malaysia company that is involved in high-risk ventures or new technology in relation to a product or activity that promotes or enhances the economic or technological development of
Malaysia.
Other incentives/There are a number of other incentives, as follows.
1. Operational headquarters company-An operational headquarters (OHQ) company that provides qualifying services to its offices and related companies outside Malaysia may be granted approved OHQ status.
The income derived by an approved OHQ from the provision of qualifying services is taxed at the reduced rate of 10% for a period of five to ten years. The income after tax may be distributed to shareholders as tax-exempt dividends.
2. International procurement centers (IPCs)-An international procurement center is a company incorporated in Malaysia, whether local or foreign owned, that carries on a business in Malaysia of procurement and sale of raw materials, components and finished products to its group companies in Malaysia or abroad. An approved IPC is exempt from customs duties on goods
brought into free zones or licensed manufacturing warehouses for repackaging or cargo integration before distribution to final consumers.
In addition, other available nontax incentives include:
a. Approval for expatriate posts based on the requirements of the IPC;
b. Ability to maintain more than one foreign currency account for the retention of export proceeds with any licensed commercial bank and without any limit on the balance in the accounts;
c. Permission to enter into foreign exchange forward contracts with a licensed commercial bank to sell forward export proceeds based on projected sales; and
d. Exemption from foreign equity ownership restrictions.
3. International trading companies-Companies that obtain approval as “international trading companies” are exempt for five years on 70% of statutory income arising from increased export dales. To qualify for the incentive the company must:
a. Be incorporated in Malaysia, with 70% of share capital owned by Malaysians;
b. Be registered with the Malaysia External Trade Development Corporation;
c. Achieve annual sales turnover of more than RM25 million, with no more than 20% of sales from commodities trading and no more than 20% consisting of goods from related companies;
d. Market manufactured goods, especially from small and medium-scale industries;
e. Use local services (e.g., banking, finance and insurance) in its operations.
4. Incentives for high-technology industries-The government has embarked on the development of a Multimedia Super Corridor (MSC), which is designed to be the research and development center of industries based on information technology (IT). The MSC spans a Greenfield site 15 by 50 kilometers, extending from the Kuala Lumpur City Centre in the north to the Kuala Lumpur International Airport in Seeping to the south. Describing
it as “an island with its own
laws, policies and practices to ensure it has the best environment in Asia,” the government has also pledged to provide the MSC with a world-class physical and information infrastructure. Eight special areas will be promoted, including telemedicine, smart schools, research and development clusters, multipurpose cards, and electronic government.
In order to ensure that MSC companies have the best environment in Asia for harnessing multimedia services, the Multimedia Development Corporation (MDC) was established to develop and manage the MSC. The MDC is a fully empowered “one-stop shop” that acts as approving authority for companies applying for MSC Company status.
Companies, institutions of higher learning and faculties awarded MSC status are eligible for both financial and nonfinancial incentives in three categories, depending on location. They are designated cybercities. outside cybercities but within the MSC,
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