What is the Government Support for logistics services companies?
The Malaysian Investment Development Authority (MIDA) supports the growth of companies undertaking integrated logistics services (ILS) by offering tax incentives for 5 years as below:
1. Pioneer status (PS)
- Tax exemption of 70% of statutory income.
2. Investment tax allowance (ITA)
- 60% of qualifying capital expenditure*
*Qualifying capital expenditure means capital expenditure incurred on factory or any plant and machinery used in Malaysia in connection with and for the purposes of ILS.
Key takeaways:
You will understand: -
1. What is the integrated logistics services?
2. What are the qualifying criteria for ILS incentive?
3. How to apply?
Integrated logistics services (ILS)
ILS refers to a company that performs a variety of end-to-end logistics-related service activities like air, ocean, road and rail transportation, warehousing and other value-added services that make up a total logistics services package.
Main activities involved:
· Warehousing
· Transportation
· Freight Forwarding
· Distribution
· Other value added services (Example: break bulking, palletising, labelling, etc)
Qualifying criteria
1. Locally incorporated
i. Incorporated under Companies Act 2016 and resident in Malaysia; and
ii. 60% equity held by Malaysian.
2. Eligible services
Must undertakes 3 principal activities:
i. Freight forwarding
ii. Warehousing
iii. Transportation
and at least one of the following activities:
i. Distribution
ii. Supply chain management
iii. Other related and value-added services/activities
- Palletizing, product, assembly/installation, breaking bulk, consolidation, packaging/re-packaging, procurement, quality control, labelling/re-labelling, testing etc.
3. Minimum Infrastructure to be owned by applicant company
i. Commercial vehicles: 20 units
- Motor vehicle for the purpose of carrying goods.
ii. Warehousing facilities: 5,000 sq metres
- To provide various facilities and services covering small dock-off depots to large scale warehouses and distribution centers.
Procedure for application
1. Register an account under https://investmalaysia.mida.gov.my.
2. Submit the application online for MIDA approval.
3. Proceed to apply for tax incentive certificate after get approval from MIDA.
Reference
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Guidebook of Integrated Logistics Services
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https://www.mida.gov.my/wp-content/uploads/2020/07/20191220163458_BOOKLET-4-LOGISTICS-SERVICES.pdf
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Guidelines for application for tax incentives for Integrated Logistics Services (ILS) (31.03.2021)
-
https://www.mida.gov.my/wp-content/uploads/2021/04/GD_ILS_31032021.pdf
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Published : 6-May-2021