SC announces enhanced tax incentives for venture capital activities

KUALA LUMPUR (June 30): The Securities Commission Malaysia (SC) has expanded the tax incentives for venture capital companies (VCCs) and VC management companies (VCMCs) to further spur VC activities in Malaysia.

Among expansions is the provision of up to five years of tax exemption period for registered VCCs, or the remaining life of the fund, whichever is shorter. This exemption applies on all statutory income sources — other than interest income arising from savings or fixed deposits and profits from Shariah-based deposits, the SC announced on Twitter.

As for tax exemption for registered VCMCs, the SC said it includes income sourced from management fees, carried interest, performance fees and share of profits derived from managing a tax-exempt VCC.

On tax deduction on qualifying investments in startups or VCCs, the SC said the investment must be one that has been held for at least three years.

“Tax deduction also includes deduction on the amount invested in qualifying startups or VCCs and it is applicable to investors who are companies or individuals with business income,” it said.

An SC certification is required before any claims can be made on these incentives.

For more details, including qualifying conditions and certification progress, go to www.sc.com.my/development/vcpe.