Introduction
Research and Development Incentives Malaysia encourage businesses to invest in innovation. Under the Income Tax Act 1967, companies may claim single or double deductions for qualifying R&D expenditure, helping to reduce tax costs while driving technological growth and competitiveness.
Types of R&D Incentives
Single Deduction – Subsection 34(7) ITA
A single deduction is allowed for non-capital R&D expenditure incurred directly by a business.
Double Deduction – Section 34A ITA
In-house R&D expenditure (non-capital in nature) approved by the Director General of Inland Revenue (DGIR) qualifies for a double deduction.
Double Deduction – Section 34B ITA
Available for:
- Cash contribution to an approved research institute
- Payment for services of an approved research institute or company
- Payment for services of an R&D company or contract R&D company
Eligibility Criteria
To claim R&D incentives, a company must:
- Be a Malaysian tax resident
- Carry on a business in Malaysia
- Undertake qualifying R&D activity related to its business
- Conduct R&D in-house or outsource to an approved institute or company
- Obtain DGIR approval for section 34A claims
- Engage approved research bodies for section 34B claims
Key Takeaways
- Single deduction under s.34(7) ITA for R&D expenses
- Double deduction under s.34A for in-house R&D, subject to DGIR approval
- Double deduction under s.34B for contributions or outsourcing to approved bodies
- Companies must be Malaysian tax residents carrying on business locally
- Deduction applies only for non-capital expenditure
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.
