Malaysia has enacted a number of tax incentives to encourage particular forms of economic activity.
Good knowledge of these tax incentives has provided them ideas to effectively plan their business and investment strategies.
This tax is specifically suitable for companies with large capital investment but cannot generate returns over a short time.
It is provided for plant and equipment acquired by the company during the tax relief period, usually from 5 to 10 years.
According to the Income Tax Act 1967 Schedule 7A- Reinvestment Allowance Subject to this Schedule, where a company which is resident in Malaysia has been in operation for not less than twelve months; and has incurred in the basis period for a year of assessment capital expenditure on a factory, plant or machinery used in Malaysia for the purposes of a qualifying project there shall be given to the company for that year of assessment a reinvestment allowance of an amount equal to sixty per cent of that expenditure:Provided that such expenditure shall not include capital expenditure incurred on plant or machinery which is provided wholly or partly for the use of a director, or an individual who is a member of the management, or administrative or clerical staff.