Quick answer: A company applies for the Malaysia Digital (MD) tax incentive on new investment to MDEC, which evaluates the application and presents it to the National Committee on Investments (NCI) for approval. The applicant must hold MD status, have at least RM50,000 paid-up capital and propose a qualifying activity in Malaysia, and generally must not have issued a sales invoice for that activity before applying. Applications must be submitted no later than 31 December 2027. After approval in principle, the company has 24 months to request MDEC to determine the commencement year.
- Apply to MDEC, which evaluates and presents to the NCI.
- Minimum paid-up capital is RM50,000 and MD status is required.
- Applications close on 31 December 2027.
- A sales invoice for the activity before applying can disqualify, subject to exceptions.
- Request the commencement year within 24 months of approval in principle.
Eligibility Summary
| Test | Requirement |
|---|---|
| Company | Incorporated and resident in Malaysia |
| Paid-up capital | At least RM50,000 |
| Status | Awarded MD status |
| Activity | Proposes a qualifying activity in Malaysia |
| Sales invoice | None for the qualifying activity before applying, subject to the guideline's exceptions |
| Other incentives | No other Malaysian tax incentive for the same activity |
Qualifying Technology Areas
- Artificial intelligence and big data analytics
- Internet of Things
- Cybersecurity
- Cloud
- Blockchain
- Drone
- Creative media technology, including XR and MR
- IC design with embedded software
- Robotics or automation
- Advanced network connectivity or telecommunications
The Process
Confirm MD status and eligibility
Check capital, activity and the sales invoice rule.
Submit to MDEC
Apply on or before 31 December 2027.
MDEC evaluation
MDEC assesses the application.
NCI decision
MDEC presents the application to the National Committee on Investments.
Approval in principle
Conditions are set.
Request commencement year
Within 24 months of approval in principle.
Dates That Matter
| Date or period | Meaning |
|---|---|
| 31 December 2027 | Last date to submit new investment applications |
| 24 months | Window after approval in principle to request commencement determination |
| Seven months after year end | Self-Declaration Form due once the incentive runs |
Not sure where you stand? WhatsApp us. We will check it before you apply.
How Long Will It Take?
The guidelines do not publish a processing time for evaluation or the NCI decision. Plan around the fixed dates above, and apply well before the deadline so that evaluation and any queries do not push you past it.
Mistakes
Invoicing before applying
It can disqualify the application.
Waiting for the last month
No processing time is published.
Applying without MD status
It is a prerequisite.
Three Scenarios
Scenario 1. A pre-revenue AI company applies early, with no invoices, and is eligible on timing.
Scenario 2. A company has invoiced for 18 months with under 60% Malaysian equity and faces the invoice rule.
Scenario 3. A company approved in principle forgets to request commencement and risks the window.
How We Help
What we handle for you
Before you apply
- Test your activity, hiring plan and cost base against MDEC's conditions.
- Advise whether MD status, a tax incentive or both make sense for your business.
- Prepare your business plan and financial plan based on your company idea or business model.
Application
- Prepare and submit the application and answer MDEC's questions.
Why companies choose us
End-to-end under one roof
- We handle company incorporation, accounting and payroll, as well as MD status and expatriate pass applications, so your structure, records and hiring plan stay aligned.
- The company is set up correctly from day one.
We check before you invest
- We confirm eligibility, including whether you can hire the expatriates you need, before a foreign investor decides to incorporate in Malaysia.
- Neutral Consulting PLT is a Kuala Lumpur firm led by a Managing Partner who is a member of the Malaysian Institute of Accountants.
Frequently Asked Questions
Quick answers.
How do I apply for the MD tax incentive?
Apply to MDEC, which evaluates and presents the application to the National Committee on Investments.
What is the deadline?
Applications must be submitted no later than 31 December 2027.
What is the minimum paid-up capital?
RM50,000.
Do I need MD status first?
Yes.
Which activities qualify?
AI and big data analytics, IoT, cybersecurity, cloud, blockchain, drone, creative media technology, IC design with embedded software, robotics or automation, and advanced network connectivity or telecommunications.
Can I have invoiced already?
Generally not for the qualifying activity before applying, subject to the guideline's exceptions.
Who approves the application?
The National Committee on Investments, after MDEC's evaluation.
How long does approval take?
The guidelines do not publish a processing time.
What is the commencement year?
The year of assessment from which the incentive period begins, determined by MDEC on request within 24 months of approval in principle.
Can I choose between rate and allowance?
Yes, one of them, not both.
What legal basis applies?
Sections 65B and 127(3)(b) of the Income Tax Act 1967.
Can you prepare the application?
We help with the business case, financial projections and eligibility checks.
Sources
Official sources
- MDEC, Guidelines on Malaysia Digital Status
- MDEC, Guidelines on Malaysia Digital (MD) Tax Incentive: New Investment
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.
Talk To Us Now
Thinking of applying for MD status? We will assess it first. All consultations are by video call.