In Malaysia, agriculture industry generates approximately 12 percent to the national gross domestic product (GDP) and also reduce unemployment rate in Malaysia. A number of departments and organizations are involved to ensure smooth progress of agriculture industry in the country. Among some of the departments are Department of Agriculture, Department of Fisheries, Malaysia Agriculture Bank (BPM), Farmers’ Organization Authority (FOA), Malaysian Agricultural Research and Development Institute (MARDI) and plenty more.
Plenty of the allowances and incentives for the agricultural industry were introduced and implemented according to National Agricultural Policy (NAP). It was introduced in an effort to develop and elevate the sector to global market and attract more investors to invest in Malaysia.
What is Qualifying capital expenditure?
Qualifying capital expenditure is defined to include expenditure incurred on:
• Clearing and preparation of land
• Planting of crops
• Provision of plant and machinery used in Malaysia for the purpose of crop cultivation; and
• Construction of access roads including bridges, construction or purchase of buildings (including those provided for the welfare of people or as living accommodation), and structural improvements on land or other structures which are used for crop cultivation. Such roads, bridges, buildings, structural improvements on land and other structures should be on land forming part of the land used for the purpose of such crop cultivation.
In view of the time lag between start-up and processing of the produce, integrated agricultural projects qualify for ITA for an additional five years for expenditure incurred for processing or manufacturing operations.
1) Food Production Incentives for New Projects
2) Food Production – Existing Companies which Reinvest
3) Incentives for 'Halal' Products
i. Production of Halal Food
ii. Halal Industry Development Corporation (HDC) Incentives
iii. Double Deduction for Expenses to Obtain Halal Certification and Quality Systems and Standards Certification
Additional Incentives for the Agricultural Industry:
1) Reinvestment Allowance
2) Reinvestment in Resource-Based Industries
3) Reinvestment in Food Processing Activities
4) Accelerated Capital Allowance
5) Agricultural Allowance
6) 100% Allowance on Capital Expenditure for Approved Agricultural Projects
7) Tax Exemption on the Value of Increased Exports
8) Incentives for Companies providing Cold Chain Facilities and Services for Food Products
i. Incentives for New Companies
ii. Incentives for Existing Companies that Reinvest
9) Double Deduction on Freight Charges for Export of Rattan and Wood-based Products
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