KUALA LUMPUR (June 4): The Malaysia Digital Economy Corp (MDEC) is now taking applications for the new Malaysia Digital (MD) tax incentive scheme from eligible MD companies that utilise any technology enablers such as artificial intelligence (AI), cybersecurity, blockchain and advanced network connectivity.

“Eligible MD companies can benefit from competitive reduced corporate income tax rate on both intellectual property (IP) and non-IP incomes, alongside investment tax allowance (ITA) for capital-intensive services activities,” MDEC, a government agency under the purview of the Ministry of Digital, said in a statement on Tuesday.

The MD tax scheme, which is supported by the Digital Ministry and the Ministry of Finance (MOF), offers tax incentives for eligible companies in two categories, namely new investment and expansion.

The new investment category may enjoy a reduced tax rate of 0% on IP income, and 5% or 10% on non-IP income for 10 years, while companies under the expansion category may enjoy a 15% reduced tax rate for five years.

Alternatively, companies under both categories can opt for ITA between 30% to 100% on capital expenditure for qualifying activities that can be offset against up to 100% of statutory income for five years.

MDEC chief executive officer Mahadhir Aziz sees MD tax incentive as a game-changer to cement Malaysia’s position as the digital hub of Asean, and align with current economic needs and international best practices.

“By attracting global talent and investment in high-growth sectors, we aim to create a thriving digital ecosystem, generate high-value jobs, boost R&D (research and development) activities, and integrate cutting-edge technologies locally,” Mahadhir said.

As of April 30, the number of awarded MD companies has surpassed 5,000, underscoring the MD initiative’s role in digital innovation across diverse industries, and supporting Malaysia’s transformation plans outlined in both the Madani Economy framework and the New Industrial Master Plan 2030 (NIMP 2030).