Incentives/Facilities Provided by the Government to Support Research Organisations
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1 Incentives/Facilities Provided by the Government to Support Research Organisations 1
2 Content 2
3 FUNCTIONS OF 3
4 Established in 1967 under Act of Parliament, 1965 The principal Malaysian Government agency responsible for the promotion and coordination of industrial development and services sector in the country First point of contact for investors who intend to set up projects in the manufacturing and services sector in Malaysia. 4
5 MITI s s Agencies 5
6 Functions of MIDA PLANNING Planning for industrial development Recommend policies and strategies on industrial promotion and development Formulate strategies, programmes and initiatives for international economic cooperation PROMOTION Foreign Direct Investment Domestic Investment Cross Border Investment Business matching through E-Connect Manufacturing Services FOLLOW-UP/MONITORING Assist companies in implementation and operation of projects Facilitate exchange & co-ordination among institutions engaged in or connected with industrial development Advisory Services EVALUATION Manufacturing licence Tax Incentives PS and ITA (including for R&D, Hotel & Tourism, Training & Manufacturing related services) Expatriate post Duty Exemption OHQ, RDC & IPC status 6
7 MIDA s s Global Network (19) Chicago San Jose Los Angeles London Boston Paris New York Stockholm Frankfurt Milan Seoul Tokyo Shanghai Osaka Dubai Guangzhou Taipei Mumbai MALAYSIA Sydney 7
8 MIDA s State Offices (12) ALOR SETAR PENANG KOTA BHARU KUALA TERENGGANU KOTA KINABALU IPOH SHAH ALAM KUANTAN SEREMBAN MELAKA JOHOR BAHRU KUCHING 8
9 Government Representatives Having Direct Linkage With MIDA Based In MIDA Immigration Department Royal Malaysian Customs Department of Environment Tenaga Nasional Berhad Telekom Malaysia Berhad Labour Department Based outside MIDA Department of Occupational Safety and Health Ministry of Finance Ministry of Health Ministry of Tourism Ministry of Human Resource Ministry of Higher Education Multimedia Development Corp. (MDeC) Construction Industry Development Board of Malaysia (CIDB) 9
10 Advise and assist investors on matters relating to tax, labour, immigration, customs, utilities, occupational, safety, and health, and environment Coordinate applications for approval and other matters under the purview of the relevant ministries and departments 10
11 INCENTIVES PROVIDED FOR RESEARCH ORGANISATIONS 11
12 Definition of R&D PIA 1986 defines Research & Development (R&D) as any systematic or intensive study carried out in the field of science or technology with the objective of using results of the study for the production or improvement of materials, devices, products, produce or processes but does not include: QC of products or routine testing or materials, devices, products or produce research in the social science or humanities routine data collection efficiency surveys or management studies market research or sales promotions. More integrated R&D and carry out design, development and prototyping as independent activities are also eligible for incentives. 12
13 Criteria of Eligibility The research undertaken should be in accordance with the needs of the country and benefits to the Malaysian economy. At least 70% of the income of the company should be derived from research and development activities. For manufacturing-based research and development, at least 50% of the workforce of the company must be appropriately qualified personnel performing research and technical functions. For agriculture-based research and development, at least 5% of the workforce of the company must be appropriately qualified personnel performing research and technical functions. 13
14 Incentives for R&D (i) Contract R&D Company A company that provides R&D services in Malaysia to a company other than its related company, is eligible for: Pioneer Status with income tax exemption of 100% of statutory income for five years. Unabsorbed capital allowances and accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company; Or Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within 10 years. The allowance can be offset against 70% of the statutory income for each year of assessment. Any unutilised capital allowances can be carried forward to subsequent years until fully utilised. Applications should be submitted to MIDA.
15 Incentives for R&D (cont..) (ii) R&D Company A company that provides R&D services in Malaysia to its related company or to any other company, is eligible for : Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within 10 years. The allowance can be offset against 70% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. Should the R&D company opt not to avail itself of the allowance, its related companies can enjoy double deduction for payments made to the R&D company for services rendered. Applications should be submitted to MIDA.
16 Incentives for R&D (cont..) (iii) In-House A company that undertakes in-house R&D to further its business can apply for an Investment Tax Allowance of 50% of the qualifying capital expenditure incurred within ten years. The company can offset the allowance against 70% of the statutory income for each year of assessment. Any unutilised allowances can be carried forward to subsequent years until fully utilised. (iv) Second Round Incentives R&D companies mentioned in categories (i) (iii) are eligible for a second round of Pioneer Status for another five years, or ITA for a further ten years, where applicable. Applications should be submitted to MIDA.
17 Incentives for R&D (cont..) (iv) Incentives for Commercialisation of Public Sector R&D To encourage commercialisation of resource-based R&D findings of public research institutes, the following incentives are given:- a)a company that invests in its subsidiary company engaged in the commercialisation of the R&D findings is eligible for a tax deduction equivalent to the amount of investment made in the subsidiary company; and b) The subsidiary company that undertakes the commercialisation of the R&D findings is eligible for Pioneer Status with income tax exemption of 100% of statutory income for 10 years Applications should be submitted to MIDA. 17
18 Incentives for R&D (cont..) (v) Double Deduction for Research and Development A company can enjoy double deduction on its revenue (non-capital) expenditure for research which is directly undertaken and is approved by the Minister of Finance. Double deduction can also be claimed for cash contributions or donations to approved research institutes, and payments for the use of the services of approved research institutes, approved research companies, R&D companies or contract R&D companies. Approved R&D expenditure incurred during the tax relief period for companies granted Pioneer Status can be accumulated and deducted after the tax relief period. Claims should be submitted to the IRB. 18
19 Incentives for R&D (cont..) (vi) Incentives for Researchers to Commercialise Research Findings Researchers who undertake research focused on value creation will be given a 50% tax exemption for five years on the income that they receive from the commercialisation of their research findings. The undertaking has to be verified by the Ministry of Science, Technology and Innovation. Claims should be submitted to the IRB. 19
20 Exemption from Import Duty and Sales Tax on Machinery/Equipment/Materials Machinery, equipment and materials which attract import duty and sales tax can be considered for exemption provided these are: - Used directly in the research activities; - used for purposes of product testing and quality control - used as spare parts/replacement parts and consumables - - Not manufactured locally; - For Sabah and Sarawak, the items are not produced in the respective States Machinery, equipment and materials that are produced locally can be considered for sales tax exemption
21 INVESTMENTS IN R&D Trends 21
22 R&D Projects Approved ( 1995 June 2009 ) Source: MIDA 22
23 R&D Projects Approved Life Sciences ( 1995 June 2009 ) Areas : - Drug discovery - Clinical trials - Formulation of anti-virals Source: MIDA 23
24 for your kind attention 24
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