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Malaysia Publishes Rules for the Global Trading Centre Incentive Scheme — Orbitax Tax News & Alerts

Malaysia's Minister of Finance has issued the Income Tax (Global Trading Centre Incentive Scheme) Rules 2022, which were published on 4 March 2022 and considered effective from the year of assessment 2021. The scheme was first announced as part of the 2021 budget and provides for a 10% income tax rate for a period of 5 years that may be renewed for another 5 years. The scheme is available for qualifying companies that undertake qualifying activities in respect of strategic sourcing, procurement, and distribution of raw materials, components, and finished products to other companies within or outside Malaysia.

As specified in the rules, conditions for the scheme include that a qualifying company must:

  • Employ at least 15 full-time Malaysian employees with a minimum salary of MYR 5,000.00 per month (high-value job) in the basis period throughout the specified years of assessment to carry on the qualifying activity and at least 50% of employees in high-value jobs must be Malaysians;
  • Have paid-up capital of at least MYR 1 million to carry on the qualifying activity;
  • Incur an annual operating expenditure of at least MYR 1.5 million to carry on the qualifying activity; and
  • Achieve an annual sales value from the qualifying activity of at least MYR 300 million.

The conditions for the scheme as formalized by the rules are in line with the guidelines issued by the Malaysian Investment Development Authority (MIDA) in September 2021. The rules apply for applications made through MIDA for the scheme on or after 1 January 2021 but not later than 31 December 2022.