Chargeable income subject to income tax amended under Income Tax (The Incentive for Manufacturers of Pharmaceutical Products Scheme) Rules 2022

30 March 2022

The Income Tax (The Incentive for Manufacturers of Pharmaceutical Products Scheme) Rules 2022 (“Rules”) were gazetted on 17 February 2022 and are deemed to have effect from the year of assessment 2021.

The Rules apply to a manufacturer of pharmaceutical products whose application for the Manufacturers of Pharmaceutical Products Incentive Scheme (“Scheme”) under the Rules has been approved by the Minister of Finance (“Minister”) through the Malaysian Investment Development Authority (“MIDA”) on or after
1 January 2021 but not later than 31 December 2022.

The chargeable income of a qualifying company which carries on business in respect of a qualifying activity is subject to income tax at the following rates:

• For the first period of 10 years of assessment, 0% to 10%; or
• For the next period of 10 years of assessment, 10%.

A qualifying company approved under the Scheme must comply with all the conditions specified under Rule 7 of the Rules as follows:

• The first qualifying capital expenditure excluding land must be incurred within one year from the date the approval letter is issued;
• The full amount of the qualifying capital expenditure as specified in the approval letter must be incurred within five years from the date the first qualifying expenditure is incurred; and
• Any conditions in the Schedule of the Rules and any other conditions imposed by the Minister as specified in the approval letter and Guidelines for Incentive for Manufacturers of Pharmaceutical Products including vaccines under the 2021 Budget issued or as revised by MIDA and approved by the Minister.