Investing In The Northern Corridor Economic Region (NCER), MALAYSIA
MAJOR DEVELOPMENT IN NCER
The Northern Corridor Economic Region (NCER) is a development plan encompassing the four Northern States of Malaysia namely Perlis, Kedah, Perak and Penang. The priority sectors in NCER are manufacturing, agriculture and bio-industries and services which include the sub-sectors of tourism, global business services and logistics & connectivity.
The objectives of the NCER initiative include:
a) To stimulate economic growth to address the imbalances and increase inclusively;
b) To achieve balance growth in the manufacturing, agriculture, bio-industries and services sectors;
c) To enhance talents to meet the growing needs of the region;
d) Increase private sector investments and finance initiatives.
The advantages include:
a) Located within the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT);
b) NCER has hosted many multinational companies and local companies with approximately RM47.7 billion of investment in the year 2009 – 2016;
c) Year 2020, RM50 million for high impact strategic projects has been allocated to Chuping Valley Industrial Area in Perlis;
d) NCER plays a predominant role in agriculture in the NCER;
e) NCER is renowned for its rich natural and heritage attraction.
MAJOR PROJECTS DEVELOPMENT IN NCER
Perlis Inland Port
- 94bil GNI per year by 2025
- 4,056 job creation
Chuping Valley Industrial Area (CVIA)
- 5bil investment by 2025
- 12,674 job creation
Kota Perdana SBEZ(KPSBEZ)
- RM50bil total GDVby 2030
- 21,050 job creation
Kedah Science & Technology Park (KSTP)
- 9bil total GDV by 2030
- 23,244 job creation
Kedah Rubber City (KRC)
- 7bil investment by 2030
- 14,471 job creation
MAIN ELIGIBILITY CRITERIA FOR NCER TAX INCENTIVE PACKAGES
b) The company must be undertaking a qualifying project or activity in NCER;
c) For Foreign Direct Investment (FDI), the company must submit its application to Northern Corridor Implementation Authority (NCIA) before commencing operation/production (including trial production);
d) For Domestic Direct Investment (DDI), the incentive application submitted to NCER must not more than twelve (12) months from production services of the proposed project. The company must be owned by 60% Malaysian Resident and must hold equity in 5 years within the incentive period;
e) Company is required to source minimum 50% of raw material/ components/ services produced in Malaysia. Employment of full time employee in compliance with current national policy;
f) Applicable to application received by NCIA from 17 August 2017 until 31 December 2025.
TAX INCENTIVES IN NCER
A. Manufacturing
1. Electrical & Electronic
2. Machinery & Equipment
a. Green Technology (product)
b. Medical Devices (products)
c. Automotive (products)
d. Additive Manufacturing (products)
e. Aerospace (products)
1. Income tax exemption of 100% of statutory income for 10 years (5 + 5); OR
2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.
3. A 50% reduction of stamp duty on instruments of transfer or lease of land.
4. Income tax exemption of 70% of statutory income for 10 years (5 + 5); OR
5. An allowance of 70% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.
B. Agriculture & Bio-Industries
a. Sustainable Agriculture
b. Processing of Agriculture Produce
c. Superfruit/ Superfood (Upstream)
d. Superfruit/ Superfood (Downstream)
e. Green Technology Services
f. Halal Industry Seed Research & Development
1. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.
2. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components not produced locally and used directly in production activities.
1. Tourism
2. Logistic
a. Medical Tourism
b. Hotel Business
c. Tourism Projects
d. Business Tourism
2. Logistics:
a. Warehousing
b. Freight Forwarding
c. Transportation
1. Income tax exemption of 100% of statutory income for 10 years; OR
2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years; AND
3. A 50% reduction of stamp duty on instruments of transfer or lease of land.
1. Income tax exemption of 70% of statutory income for 10 years (5+5); OR
2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.
3. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components not produced locally and used directly in production activities for Kedah, Perak, Perlis and Penang.
D. Medical Science and Science & Technology
Research, development and inspection works for customers.
1. Income tax exemption of 100% of statutory income for 10 years; OR
2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
1. Income tax exemption of 70% of statutory income for 10 years (5 + 5); OR
2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.
In-House R&D
Research & development undertaken by Malaysian company for their own business.
1. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.
2. Unutilised allowances are allowed to be carried forward to the following year until fully utilised.
R&D Company
Research on science or technology including Industry 4.0 for the production/ improvement of materials, equipment, products or processes.
1. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.
2. Unutilised allowances are allowed to be carried forward to the following year until fully utilised.
Seed R&D Centre
Investor
1. Income tax exemption of 100% of statutory income for 10 years; OR
2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
1. Income tax exemption of 70% of statutory income for 10 years (5 + 5); OR
2. An allowance of 70% on the qualifying capital expenditure incurred within 10 years.
Seed R&D Centre
Operator
1. Income tax exemption of 100% of statutory income for 10 years (5 + 5); OR
2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income.
3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.
4. Industrial Building Allowance for 10 years on building used for Seeds R&D Centre operating in Kedah Science & Technology Park (KSTP).
5. Tax deduction for 5 years on cost incurred to acquire property rights with condition that the Seed R&D Centre is at least 51% Malaysian owned.
Approved Agriculture Project
1. Income tax exemption of 100% of statutory income for 10 years on new project undertaken; OR
2. Income tax exemption of 100% of statutory income for 5 years on expansion project approved by Jawatankuasa Penilaian Insentif Sektor Pertanian (JPISP).
3. Tax deduction for investor company carrying on an Approved Agriculture Project by JPISP.
Education
a. Private Institution of Higher Learning
b. Technical & Vocational Education and Training (TVET)
c. International/ Private Schools
1. Income tax exemption of 70% of statutory income for a period of limited 5 years; OR
2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 70% of the statutory income.
3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.
2. Perak Tengah
3. Kuala Kangsar
4. Badan Datuk
5. Seberang Prai Utara
6. Seberang Prai Selatan
7. Seberang Prai Tengah
8. Barat Daya Pulau Pinang
1. Income tax exemption of 100% of statutory income for a period of 15 years; OR
2. An allowance of 100% on the qualifying capital expenditure incurred within certain period, will be set-off against up to 70% of the statutory income.
1. KSTP Park Manager
a. Manufacturing activities in agro-science;
b. Advanced material
c. Information & Communication Technology;
d. Biotechnology;
e. Component R & D;
f. Halal science;
g. Green Technology
2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years (5+5). This allowance will be set-off against up to 70% of the statutory income.
3. Unutilised allowances are allowed to be carried forward to the following years until fully utilised.
4. A 50% stamp duty reduction on transfer or lease of land/building.
5. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components which are not produced locally and used directly in production activities.
6. This approval is subject to product/service provision from qualifying activity. This approval does not apply to income derived from intellectual property services.
Commercial property development only
4. KSTP Global Research Centre (GRC)
Income tax exemption of 100% of statutory income for 15 years (5+5+5).
a. IHL and TVET
2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years.
Commercial property development only
1. Income tax exemption of 70% of statutory income for 5 years for the following income:
a. Disposal of all or part of right or land/building located at CVIA; OR
b. Rental of all or part or the land/buildings located at CVIA.
2. Stamp duty exemption on transfer or lease of land only.
Income tax exemption of 100% of statutory income for 5 years.
3. Waste-To-Resources Facilities Provider
2. An allowance of 100% allowance on the qualifying capital expenditure incurred within 10 years. This allowance will be set-off against up to 70% of the statutory income. Unutilised allowances are allowed to be carried forward to the following years until fully utilized.
3. A 50% stamp duty reduction on transfer or lease of land/ building.
4. Import duty exemption on plant and machinery, equipment, spare parts, raw materials and components which are not produced locally and used directly in production activities.
a. Institution of Higher Learning (IHL); and
b. Technical and Vocational Education and Training (TVET).
2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 70% of the statutory income. Unutilised allowances are allowed to be carried forward to the following years until fully utilized.
a. Green Manufacturing;
b. Halal industry;
c. Machinery and equipment;
d. Specialised machinery and equipment;
e. Green Energy Generation
2. An allowance of 100% on the qualifying capital expenditure incurred within 10 years (5+5). This allowance will be set-off against up to 70% of the statutory income.Unutilisedallowances are allowed to be carried forward to the following years until fully utilized.
3. A 50% stamp duty reduction on transfer or lease of land/ building.
1. Manufacturer
2. Income tax reduction of 50% for 5 years after expiry of the first 10 years; OR
3. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be offset against up to 100% of statutory income for each assessment year.
4. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.
5. Tax deduction for pre-operating expenses incurred within 4 years before the commencement date of qualifying activity and such expenses shall be deemed to be incurred on the commencement date.
2.An allowance of 100% on the qualifying capital expenditure incurred within 10 years. This allowance will be offset against up to 100% of statutory income for each assessment year.
3.Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.
4. Tax deduction for pre-operating expenses incurred within 4 years before the commencement date of qualifying activity and such expenses shall be deemed to be incurred on the commencement date.
3. Main Developer and Residential and Commercial Developer
2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be offset against up to 100% of statutory income for each assessment year.
3. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.
2. An allowance of 100% on the qualifying capital expenditure incurred within 5 years. This allowance will be set-off against up to 100% of the statutory income for each assessment year.
3. Stamp duty exemption on the instrument of transfer of land or building or lease of land or building used for the qualifying activities in Rubber City.
4. Tax deduction for pre-operating expenses incurred within 4 years before the commencement date of qualifying activity and such expenses shall be deemed to be incurred on the commencement date.