Review of Tax Incentives for Bionexus Status Company

Updated on 15 July 2023- Dialogue between MOF, LHDNM, and CTIM [21/6/2023]

To Download Revised Budget 2023 Speech and some other related publications – https://www.ccs-co.com/post/budget-2023-malaysia-madani

Current Position

“Bio Nexus Status Company” means a company incorporated under the Companies Act 2016 [Act 777] engaged in the life sciences business.

Tax incentives for BioNexus status companies are given as follows:

1. a company undertaking biotechnology activity and approved with BioNexus status:
   1. Income Tax Exemption of 70% on statutory income commencing from the first statutory income for a period of 10 or 5 years, subject to new or existing business (expansion project);
   2. concessionary tax rate of 20% on income from qualifying activities for 10 years upon the expiry of the tax exemption period;
   3. Double Tax Deduction on research & development expenditure;
   4. Industrial Building Allowance on building for biotechnology research activities; and
   5. Import Duty Exemption on raw materials / components and machinery / equipment.
2. a company that undertakes investment in a BioNexus status subsidiary company engaging in a new project is given a tax deduction equivalent to the amount of investment made in the basis year the investment is made.

The tax incentive is for applications received by the Malaysian Bioeconomy Development Corporation from 1 January 2021 until 31 December 2022.

Proposal

To encourage more industry players, it is proposed tax incentives be reviewed as follows:

• income tax exemption on statutory income be increased from 70% to 100%; and
• the application period for tax incentives is extended for 2 years.

Effective Date

For applications received by the Malaysian Bioeconomy Development Corporation from 1 January 2023 until 31 December 2024.

Updated on 15 July 2023- Dialogue between MOF, LHDNM, and CTIM [21/6/2023]

BioNexus status companies also get an income tax exemption which is equivalent to the allowance based on 100% of qualifying capital expenditure (“QCE”), i.e. Investment Tax Allowance (“ITA”).

CTIM sought to confirm that the proposed two years application period extension applies to all tax incentives for BioNexus status companies, including the ITA and is not just restricted to the items listed in Appendix 19.

MOF’s Feedback:

Extending the 2-year application period applies to all tax incentives for BioNexus status companies, including the Investment Tax Allowance.

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