There are two types of research and development companies which qualify for incentives: ‘companies’ and ‘contract companies’.
A research and development business is a systematic or critical study conducted in the sector of science or technology. The objective of the study must be the manufacture or improvement of materials, components, utilities, goods, produce or process:
A research and development business on a contract qualifies can apply for full income tax immunity at statutory income level for five years or a full (100%) Investment Tax Allowance (ITA) on eligible capital expenditure incurred within a decade. The ITA can be used to counterbalance against 70% of the statutory income.
Otherwise, there are research and development companies, which are defined as offering research and development services in Malaysia or to any of its affiliated companies. It qualifies to apply for 100% ITA capital expenditure incurred within the decade of establishment. The ITA can be utilised to offset against 70% of the statutory income.
Contract research and development companies and research and development companies will qualify for incentives offered, providing they meet the following criteria: