Tax Incentives
Capital Allowance (CA)
These tax incentives are claimable deductions for qualifying fixed assets such as industrial machinery, office equipment and sign boards. In this instance, if you installed a solar photovoltaic (PV) system, it would be classified under “Plant & Machinery”, making it eligible for depreciation of over six (6) years. The CA incentive contains of the following:
- Initial Allowance (IA) of 20% for the first year.
- Annual Allowance (AA) of 14% for subsequent years until the full amount has been accounted for.
Green Investment Tax Allowance (GITA)
A tax incentive for green technology projects, the Investment Tax Allowance (ITA) of 100% of qualifying capital expenditure (QCE) for a project from the year of assessment no later than the 25th of October 2013, until the year of assessment 2020. This allowance can be offset against 70% of statutory income in the year of assessment. If the allowance was unutilised, it can be carried forward until they are fully absorbed.
If your project is related to renewable energy (RE), energy efficiency (EE), green building, green data centre and waste management, it can be considered for this tax incentive. As for the project applying to this incentive, it is applicable for companies that undertake qualifying green technology projects for business or own consumption.
For those who are eligible for this tax allowance, the Capital Expenditure (CAPEX) shall be expended by the 31st of December 2020. This CAPEX allows you to waive the corporate income tax, however, it is only applicable for C&I industry players.
Can I apply for GITA?
In order to apply for the GITA, your company needs to fulfil the following criteria:
- Company must be incorporated under the Companies Act, 1965/2016.
- Achieve the following green results:
- Showcase energy usage and/or other forms of natural resources or promote the use of renewable energy or recycle waste material resources.
- Minimise the environmental harm and reduce the level of greenhouse gas emissions.
- Promote health and improve the environment.
Source: Malaysian Investment Development Authority (MIDA) & MyHIJAU
Here’s an Example of How Your Savings with GITA & CA Could Look Like:
If XYZ Sdn Bhd were to invest RM 1,000,000 in a solar PV system, with an overall profit before tax of RM 5,000,000, they will have an additional CA granted at RM 340,000. With a tax bracket of 24%, they will have a net saving of RM 81,600 under CA for the first year.
In total with the GITA of RM 240,000, XYZ Sdn Bhd would be able to reduce their tax liability to a difference of RM 321,600.
What We Will do for You
In Plus Solar, as we understand the challenges of navigating applications for the tax allowances, we assist with local authority liaison in ensuring that necessary approvals are in place to create a better value for your business. As the nation’s leading total clean energy solutions provider, we have collectively completed more than 181MWp of grid-connected solar PV systems and six large-scale solar (LSS) PV power plants throughout Malaysia.
Do you have more questions about these initiatives? Contact web@plus-solar.com.my for answers or receive a free quote inquiry today!
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In Plus Solar, we believe in powering sustainable growth. Through offering world-class solar PV solutions, we aim to provide the highest solar PV development standards while making the switch to cleaner energy. A simple and effortless process for our customers.