Budget 2024: Further Tax Deduction For Voluntary Carbon Market (VCM)

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A Certified Emissions Reduction, also known as CER, is a certificate issued by the United Nations to member nations for preventing one tonne of carbon dioxide emissions.

These are usually issued to member states for projects achieving greenhouse gas reductions using Clean Development Mechanisms (CDM).

CDMs allow these projects to occur and set a baseline for future emission targets.

经核证的减排量,又称 CER,是联合国向会员国颁发的防止一吨二氧化碳排放的证书。



In line with the efforts to encourage companies to invest in Clean Development Mechanism Projects to reduce greenhouse gases, income tax exemption on the sale of Certified Emissions Reduction (CERs) was given from the year of assessment 2008 until the year of assessment 2012.

In 2022, Bursa Malaysia launched a voluntary carbon market (VCM) initiative called the Bursa Carbon Exchange (BCX).

This initiative acts as a voluntary platform for carbon credit trading between carbon development project owners with any entity that aims to shift to low-carbon practices.

Expenditure related to the development of carbon projects incurred by carbon credit trading companies is allowed for tax deduction under subsection 33(1) of the Income Tax Act 1967.

Budget 2024:

In line with the Government’s aspiration to become a carbon-neutral nation by 2050 and to encourage more companies to participate in VCM, it is proposed further tax deduction of up to RM300,000 be given to companies for costs incurred on the Development and Measurement, Reporting and Verification (MRV) related to the development of carbon projects.

The further tax deduction is deductible from the carbon credit income traded on BCX.

The development of carbon projects must be registered with an international standards body recognised by Bursa Malaysia, and expenditure on the development of carbon projects must be certified by the Malaysia Green Technology and Climate Change Corporation (MGTC).

Effective Date

For applications received by the MGTC from 1 January 2024 until 31 December 2026.


Finance (No.2) Bill 2023 –

Finance (No. 2) Bill 2023: Amendment of section 2 –
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