Malaysia Digital Status Application in Malaysia

What is Malaysia Digital Status

MSC Malaysia is now rebranded to Malaysia Digital Status (MD). This new enhanced initiative serves to accelerate the sustainable growth of Malaysia’s digital economy and create substantial digital economic spill-over through equitable access to digital tools, knowledge, and income opportunities. Malaysia Digital will drive digital transformation of focus areas that present high growth potential, opportunities and importance.

Eligibility criteria

  1. A company incorporated under the Companies Act 2016 and resident in Malaysia;
  2. Proposing to carry out or is currently carrying out one or more of the MD activities as listed in the table (MD activities)

Conditions of MD Status

       Conditions to be complied within 12 months from date of award of MD Status
1. Activity Commencement of operation and undertaking of the MD Approved Activities in Malaysia
2. Knowledge workers Minimum 2 full-time employees (comprising knowledge workers) with minimum average monthly base salary of Ringgit Malaysia Five Thousand (RM5,000.00), employed for the MD Approved Activities
3. Operating Expenditure Minimum annual operating expenditure of Ringgit Malaysia Fifty Thousand (RM50,000.00) incurred for the MD Approved Activities
4. Paid-up Capital Minimum of Ringgit Malaysia One Thousand (RM1,000.00)

Bill of Guarantees (BoGs)

Under the Malaysia Digital BoGs, MD Status companies are eligible to access or apply for, amongst others:

  1. Foreign knowledge worker quota and passes;
  2. Tax incentives (income tax exemption or investment tax allowance);
  3. Multimedia/ICT equipment import duty and sales tax exemption;
  4. Competitive and ready infrastructure for business available at MD Cybercities/Cybercentres;
  5. Freedom of ownership by exempting from local ownership requirements;
  6. Flexibility to source capital and funds globally; and/or
  7. MDEC as the one-stop agency for MD Status companies.

Other Benefits

Malaysia Digital Status companies are also eligible to access the facilitation of other benefits such as:

  1. Access to local and international market and ecosystem;
  2. Business matching and partnership;
  3. Grant and funding facilitation; and/or
  4. Participation in MD catalytic programmes

Sustainable Development Goals

Malaysia Digital Status companies are highly encouraged to align operations to the Government’s carbon neutral and environmental, social and governance (ESG) goals https://www.epu.gov.my/en/sustainable-development-goals

MD Activities

  1. Artificial Intelligence (AI)
  2. Big Data Analytics (BDA)
  3. Blockchain
  4. Creative Media Technology
  5. Sharing Economy Platform
  6. Internet Of Things (IOT)
  7. Data Centre and Cloud (Technology/Software/Design and Support)
  8. Cybersecurity (Technology/Software/Design and Support)
  9. Drone Technology
  10. Financial Technology (FinTech)
  11. 3D Printing (Technology/Software/Design and Support)
  12. Autonomous (Technology/Software/Design and Support)
  13. Integrated Circuit (IC) Design and Embedded Software
  14. Robotics (Technology/Software/Design and Support)
  15. Systems/Network Architecture Design and Support
  16. User Interface and User Experience (UI/UX)
  17. Virtual, Augmented and/or Extended Reality
  18. Advance Telecommunication Technology
  19. Other Emerging Technologies Deemed Significant for the Digital Ecosystem Subject to Approval by the Approval Committee
  20. Global Business Services or Knowledge Process Outsourcing Excluding Non-Technical and/or Low Value Call Centre; and Recruitment Process Outsourcing.

Non Qualifying Promoted Activities

  1. Trading
  2. Manufacturing

Malaysia Digital Status

MD Status with Tax Incentives

Eligibility criteria

  1. Proposing to carry out one or more of the Malaysia Digital promoted activities and has not issued any invoice for such proposed activities in Malaysia on the date of application;
    Example: A company which has issued an invoice may be eligible if it has at least 60% Malaysian equity ownership and has issued its first invoice for such proposed activities in Malaysia not more than 12 months prior to the date of application
  2. Not granted by the Government of Malaysia tax exemption in respect of the income from any activity on the date of application; and
  3. Has made an application for the award of Malaysia Digital Status.
  4. If a company has a related company which has been granted tax exemption in respect of the income from an activity which falls under any of the items of the MD promoted activities, such company shall not be eligible to apply for the income tax exemption under MD Status in respect of a proposed activity which falls under the same item.
Malaysia Digital Status Tier 1 & Tier 2 Tier 3
Percentage of income tax exemption 100% 70%
Exemption period 5 years 5 years
To comply within Year 1 and Year 2 of the tax exemption period
Full time employees 2 full time employees (comprising knowledge workers of RM5,000/mth salary) 2 full time employees (comprising knowledge workers of RM5,000/mth salary)
Annual Opex RM50,000 RM50,000
To comply within Year 3, Year 4 and Year 5 of the tax exemption period
Full time employees (i) 50 full time employees with monthly
base salary of RM5,000; OR
(ii) 30 full time employees with monthly base salary of RM10,000		 (i) 30 full time employees with monthly
base salary of RM5,000; OR
(ii) 20 full time employees with monthly base salary of RM8,000
Data Centre: 5 full time employees with
monthly base salary of RM5,000
Annual Opex & Invesment (Fixed asset) RM3,500,000 RM1,000,000
Data Centre: RM10 million
% of Malaysian Knowledge Worker 70% 50%
Paid-up capital RM500,000 RM250,000

Knowledge Workers Definition

A “knowledge worker” is an individual who holds one of the following:

  • Tertiary qualification from an institution of higher learning (in any field); or
  • Diploma in ICT, engineering, technology or specialized certification plus at least 2 years’ relevant experience in a field that is a heavy user of technology; or
  • Professional, executive, management and technical work categories in information technology enabled services eg. Information Technology / IS
  • Professionals, Finance / Accounting, Business Administration, Engineering, Medical, Legal,
    and also includes:
  • foreign workers with knowledge-based skills that are not prevalent in Malaysia and required by MD Status companies.
  • workers who are utilised for their creative talent to produce value-added creative work for MD Status companies.

Source: MDEC

Contact us or WhatApp us today to know more about MD Status