Tax Incentives For The Manufacturing Sector : Investment Tax Allowance
The major tax incentives for companies investing in the manufacturing sector are the Pioneer Status and the Investment Tax Allowance.
Eligibility for Pioneer Status and Investment Tax Allowance is based on certain priorities, including the level of value-added, technology used and industrial linkages.
Eligible activities and products are termed as “promoted activities” or “promoted products”. (See Appendix I: List of Promoted Activities and Products – General)
The company must submit its application to MIDA before commencing operation/production.
(i) Investment Tax Allowance
As an alternative to Pioneer Status, a company may apply for Investment Tax Allowance (ITA). A company granted ITA is entitled to an allowance of 60% on its qualifying capital expenditure (factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date the first qualifying capital expenditure is incurred.
The company can offset this allowance against 70% of its statutory income for each year of assessment. The remaining 30% of its statutory income will be taxed at the prevailing company tax rate.
Any unutilised allowance can be carried forward to subsequent years until fully utilised.
Applications should be submitted to MIDA.
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Published : 8-Jun-2022