Quick answer: Malaysia Digital (MD) status is an award from MDEC for companies doing approved digital activities, and it needs RM1,000 paid-up capital. The MD tax incentive is a separate application, approved by the National Committee on Investments, for a reduced tax rate or an investment tax allowance. It requires MD status first and at least RM50,000 paid-up capital. Applications for the tax incentive close on 31 December 2027.
- MD status does not give a tax incentive automatically.
- The tax incentive is a separate application and needs MD status.
- Paid-up capital: RM1,000 for status, RM50,000 for the tax incentive.
- Tax incentive applications close on 31 December 2027.
Two Layers, Two Applications
Layer 1: MD status
What it is
- An award from MDEC for companies doing approved digital activities.
- Perpetual, subject to compliance.
What you must meet within 12 months
- Begin MD activities in Malaysia.
- At least two full-time knowledge workers at RM5,000 average monthly base salary.
- At least RM50,000 annual operating expenditure.
- Paid-up capital of RM1,000.
What you get
- Access to foreign knowledge worker quota and passes.
- Eligibility to apply for tax incentives, subject to separate approval.
- MDEC as a one-stop agency.
Layer 2: MD tax incentive
What it is
- A separate application for a tax benefit, approved by the National Committee on Investments.
- Open for applications until 31 December 2027.
What you must meet
- Hold MD status.
- At least RM50,000 paid-up capital.
- A qualifying research, development or commercialisation activity.
- No sales invoice for the activity before you apply, with a limited exception.
What you get
- Either a reduced tax rate of 10% or 5% for 10 years, or an investment tax allowance of 60% or 100% of qualifying capital expenditure for 5 years.
The Order to Apply
Confirm your activity
Check that your business falls within one of the MD activity categories. MDEC's list has 20 categories, including artificial intelligence, big data analytics, fintech, cybersecurity, cloud and data centres, and blockchain.
Apply for MD status
Apply online through MDEC and pay the non-refundable processing fee published on MDEC's website. MDEC assesses it and the Approval Committee decides. You accept the approval letter and receive an MD status digital certificate.
Meet the 12-month conditions
Begin your MD activities, hire the knowledge workers, spend the minimum operating expenditure and pay in the capital within 12 months of the award.
Apply for the MD tax incentive
Submit to MDEC before 31 December 2027. MDEC evaluates it and the National Committee on Investments approves. You need MD status, RM50,000 paid-up capital and a qualifying activity.
Report every year
Submit a self-declaration form and have it verified by an independent external auditor. For the tax incentive, the self-declaration is due within seven months after each year of assessment ends.
Planning to apply for Malaysia Digital? We handle both applications.
Side-by-Side
| MD status | MD tax incentive | |
|---|---|---|
| Purpose | Recognition and access to MD benefits | A reduced tax rate or an investment tax allowance |
| Who decides | MDEC Approval Committee | National Committee on Investments, after MDEC evaluation |
| Minimum paid-up capital | RM1,000 | RM50,000 |
| Validity | Perpetual, subject to compliance | 10 years for the reduced rate, 5 years for the allowance |
| Application window | Ongoing | 19 April 2024 to 31 December 2027 |
| Annual report | Self-declaration form, externally verified | Self-declaration form within 7 months after each year of assessment |
Frequently Asked Questions
Quick answers on MD status and the MD tax incentive.
What is the difference between Malaysia Digital status and the MD tax incentive?
MD status is an award from MDEC that recognises your company and gives access to benefits such as foreign knowledge worker passes. The MD tax incentive is a separate application for a reduced tax rate or an investment tax allowance. You need MD status first.
Does MD status give me a tax incentive automatically?
No. MDEC's MD status guidelines say tax benefits are subject to separate approvals being obtained, and to each programme's own criteria.
What are the conditions for MD status?
Within 12 months of the award, you must begin MD activities in Malaysia, employ at least two full-time knowledge workers with a minimum average monthly base salary of RM5,000, spend at least RM50,000 a year on operating expenditure for MD activities, and have RM1,000 paid-up capital.
What are the conditions for the MD tax incentive?
The company must be incorporated in Malaysia and resident, hold MD status, have at least RM50,000 paid-up capital, and carry out a qualifying research, development or commercialisation activity. Other conditions are set in the approval.
How much paid-up capital do I need?
RM1,000 for MD status, and at least RM50,000 for the MD tax incentive.
Who approves each one?
MDEC's Approval Committee decides MD status. For the MD tax incentive, MDEC evaluates the application and the National Committee on Investments approves it.
Is MD status permanent?
MDEC's guidelines say MD status is perpetual, subject to continued compliance with the approved conditions. The company reports annually and the status can be revoked for non-compliance.
Is there a deadline to apply for the MD tax incentive?
Applications must be submitted on or after 19 April 2024 and not later than 31 December 2027.
Can I apply for both at the same time?
MD status comes first, because the tax incentive requires an awarded MD status. Plan the two applications together so the second follows the first without delay.
Does the MD tax incentive apply to every MD activity?
No. The qualifying activity must be research, development or commercialisation using one of ten promoted technology enablers. Trading, manufacturing, telecom services and several business process outsourcing activities are excluded.
About This Guide
This guide was prepared by Neutral Consulting PLT, a Kuala Lumpur firm of chartered accounting and advisory professionals with 10 years in practice. We help foreign and local companies set up, stay compliant and hire talent in Malaysia. Every figure and rule here was checked against the official sources listed below in November 2026.
Sources
Official sources
- MDEC, Guidelines on Malaysia Digital Status (revised 28 August 2025)
- MDEC, Guidelines on Malaysia Digital Tax Incentive, New Investment (revised July 2025)
- MDEC, Malaysia Digital Tax Incentive
This page is general information, not legal advice. Agencies change their requirements, so confirm the current rules with MDEC, or with us, before you act. Checked November 2026.
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