Introduction

Enhanced AIE Malaysia provides powerful tax incentives for exporters who achieve significant growth, enter new markets, or receive excellence awards. Under the Income Tax Act 1967, companies can enjoy exemptions ranging from 30% to 100% of statutory income, helping reduce tax costs while boosting international trade.

What is Enhanced AIE?

Enhanced AIE is an extension of the normal Allowance for Increased Exports (AIE). It is granted to Malaysian companies that demonstrate exceptional export performance. Incentives are offered in three categories:

• Significant increase in exports (30%)
• New market penetration (50%)
• Export Excellence Awards (100%)

These incentives aim to encourage Malaysian businesses to expand globally while strengthening competitiveness.

Qualifying Criteria

To qualify for Enhanced AIE, a company must:

• Be incorporated in Malaysia under the Companies Act 2016
• Be a Malaysian tax resident
• Have ≥60% ownership by Malaysian citizens
• Manufacture products or agricultural produce
• Export products directly (not via free zones, licensed warehouses, Langkawi, Labuan, or Tioman)
• Record an increase in export sales

✅ There is no fixed period — companies may qualify in any Year of Assessment (YA) if conditions are met.

Mechanism of the Incentive

Value of Increased Exports → Calculated based on FOB (Free on Board) value compared to previous year or average of preceding periods.

Computation Overview

1. Apply exemption rate (30% / 50% / 100%) to value of increased exports.
2. Add unutilized exempt amount brought forward from previous YA.
3. Deduct exempt amount from statutory income (max 70%).
4. Carry forward excess until fully utilized against the same business source.
5. Resident companies → exempt income credited → allows distribution of two-tier exempt dividends.

Non-Application of Enhanced AIE

The exemption will not apply if the company already enjoys:

• Pioneer Status under PIA 1986
• Reinvestment Allowance
• Exemption under Para.127(3)(b) or s.127(3A)
• Deduction under s.154 (except Schedule 3 allowances & statutory expenses)

Excluded Products

Enhanced AIE does not apply to:

• Tin, natural rubber, crude palm oil
• Logs, sawn timber, wood chips
• Petroleum oils, natural gas, hydrogen, nitrogen, oxygen

Key Takeaways

• Enhanced AIE Malaysia grants 30%–100% income tax exemption.
• Incentives cover significant export growth, new market penetration, and excellence awards.
• Exempt amount restricted to 70% of statutory income.
• Certain commodities (tin, crude oil, timber, rubber) are excluded.
• Companies may claim in any YA if qualifying conditions are met.
  

For more details, you may refer to the link below:

• MITI Export Excellence Awards

• MATRADE – Malaysia External Trade Development Corporation

ANC Group – Your Personal Tax Advisor

Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies.

Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends.

ANC Group keep you abreast with Malaysia tax updates and any changes in the local regulations.

We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.

If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.