MSC Status Application in Malaysia
What is MSC Status
Established by the Malaysian government to accelerate the growth of the nation’s Digital Economy, the MSC Malaysia status provides eligible ICT-related businesses, both local and foreign, with a wide range of incentives, rights and privileges to promote continued growth.
With over 2,000 companies and counting, the MSC Malaysia status is a designation that is highly sought after by many IT establishments in the country. Being recognised as a MSC Malaysia Status Company provides a company access to exclusive incentives that can give them the edge necessary in the hyper-competitive IT industry.
- A company incorporated under the Companies Act 2016 and resident in Malaysia;
- Proposing to carry out one or more of the MSC Malaysia promoted activities as listed in the table (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)
- Not granted by the Government of Malaysia tax exemption in respect of the income from any activity on the date of application.
- 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 MSC Malaysia promoted activities, such company shall not be eligible to apply for the financial incentives under MSC Malaysia in respect of a proposed activity that falls under the same item.
Commencement Date of Exemption Period
- The company must fulfill the conditions on location (if applicable) and commencement of operation within 24 months from the date of award of MSC Malaysia Status, in order to request for the determination of the commencement date of the exemption period. The request is to be made to MDEC. No extension of time shall be granted.
- The commencement date of the exemption period shall be the date of the first invoice issued by the company after the award of MSC Malaysia Status for the approved MSC Malaysia promoted activities. For the avoidance of doubt, the company must fulfill the condition on location (if applicable) on the commencement date.
- The company is required to submit to MDEC annually all true, correct and complete information and/or documents for purpose of reporting on the progress of the approved MSC Malaysia promoted activities and/or determining compliance of the applicable conditions, failing which the tax exemption granted may be withdrawn.
- The company is required to maintain a separate account for the statutory income derived
from the approved MSC Malaysia promoted activities.
- The tax exemption granted may be withdrawn in the event of non-compliance of any of
the applicable conditions and/or provisions under the applicable legislation.
- Big Data Analytics (BDA)
- Artificial Intelligence (AI)
- Financial Technology (FinTech)
- Internet of Things (IOT)
- Cybersecurity (technology/software/design and support)
- Data centre and cloud (technology/software/design and support)
- Creative Media Technology
- Sharing Economy Platform
- User Interface and User Experience (UI/UX)
- Integrated Circuit (IC) design and Embedded software
- 3D printing (technology/software/design and support)
- Robotics (technology/software/design)
- Autonomous (technology/software/design and support)
- Systems/network architecture design and support
- Global Business Services or Knowledge Process Outsourcing excluding non- technical and/or low value call center; data entry; and recruitment process outsourcing
- Provision of Telecommunication Services
MSC Status Office Listing
List of MSC Status Office in Malaysia; Tier 1, Tier 2, Tier 3 CLICK HERE
The tax exemption is granted under Income Tax (Exemption) (No. 10) Order 2018 [P.U.(A)
Income Tax Exemption; Scope and Conditions
|MSC Malaysia Status Company||Tier 1||Tier 2||Tier 3|
|Minimum KPI Numbers|
|Percentage of income tax exemption||100%||100%||70%|
|Exemption period||5 years||5 years||5 years|
|Extension of exemption period||5 years||5 years||May apply for extension provided that the company changed to Tier 1 or Tier 2 and fulfills the conditions imposed|
|Standard Conditions:||Tier 1||Tier 2||Tier 3|
|To be complied with within 24 months from the date of award of MSC Malaysia Status and thereafter during the exemption period:|
|(1) Location of approved MSC Malaysia Promoted Activities||Designated Premises within MSC Malaysia Cybercities or Cybercentres||Other Commercial Premises within MSC Malaysia Cybercities or Cybercentres||Not subjected to location|
|(2) Commencement of operation and undertaking of the approved MSC Malaysia Promoted Activities in Malaysia|
|To be complied with by the end of Year 2 from the commencement date of the exemption period and thereafter during the exemption period:|
|(3) Paid-up capital||RM500,000*||RM250,000|
|(4) Full time employees
(comprising Knowledge Workers) with
monthly base salary
|(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
|(5) Annual operating expenditure and investment in fixed asset||RM3.5mil||RM1mil|
|Data Centre: RM10 million|
|(6) % of Malaysian Knowledge Workers
(for the full time employees in (4) above)
|*Note: The minimum amount paid up capital needs to be increased to RM2.5mil for the extension of exemption period for the second 5 years|