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Under the Promotion of Investments Act 1986,
the term "company” in relation to agriculture includes:
Companies producing promoted products or
engaged in promoted activities (please refer to the grey list) are eligible to apply for the following
incentives:
Pioneer Status
As in the manufacturing sector, companies producing promoted
products or engaged in promoted activities are eligible for Pioneer
Status.
Investment Tax Allowance (ITA)
Companies producing promoted products or
engaged in promoted activities can apply for Investment Tax Allowance
(ITA). To enable
agricultural projects to enjoy greater benefits, the Government has
broadened the definition of qualifying capital expenditure to include
the following:
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the clearing and preparation of land;
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the planting of crops;
-
the provision of plant and machinery used in Malaysia for the
purposes of crop cultivation, animal farming, aquaculture, inland
or deep-sea fishing and other agricultural or pastoral pursuits;
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the construction of access roads including bridges, the
construction or purchase of buildings (including those provided
for the welfare of persons or as living accommodation for persons)
and structural improvements on land or other structures which are
used for the purposes of crop cultivation, animal farming,
aquaculture, inland fishing and other agricultural or pastoral
pursuits. Such roads, bridges, buildings, structural improvements
on land and other structures should be on land forming part of the
land used for the purpose of such crop cultivation, animal
farming, aquaculture, inland fishing and other agricultural or
pastoral pursuits.
In view of the time lag between start-up of the agricultural
project and processing of the produce, integrated agricultural
projects are eligible for ITA for an additional five years for
expenditure incurred for processing or manufacturing operations.
Reinvestment Allowance
Reinvestment Allowance is granted to a person or a company engaged
in the production for at least 12 months of essential food such as
rice, maize, vegetable, tubers, livestock, aquatic products, and any
other activities approved by the Minister of Finance. The qualifying
capital expenditure comprises:
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the clearing and preparation of land;
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the planting of crops;
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the provision of irrigation or drainage systems;
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the provision of plant and machinery;
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the construction of access roads including bridges;
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the construction or purchase of buildings, including those
provided for the welfare of persons or as living accommodation for
persons and structural improvements on land or other structures.
Agricultural projects (excluding the processing of agricultural
inputs) are exempted from the productivity criteria.
Agricultural Allowance
A person or a company carrying on an agricultural activity can
claim capital allowances or agricultural allowances under Schedule 3
of the Income Tax Act 1967 in respect of certain capital expenditure
incurred for purposes of that business. Capital expenditure incurred
in agricultural activities which are eligible for deduction are as
follows:
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Expenditure incurred on the clearing and preparation of land,
planting of crops and construction of roads for purposes of
agriculture is eligible for a yearly allowance of 50% of the
expenditure incurred.
-
Expenditure incurred on construction of buildings for the
welfare of persons or living accommodation can be written off at a
rate of 20% per annum.
-
Expenditure incurred on the construction of any other building
used for the purposes of working the farm can be written off over
a period of 10 years.
As long as companies incur the above qualifying expenditure, they
will be given this allowance irrespective of whether or not they have
been granted Pioneer Status or Investment Tax Allowance.
Deduction for Capital Expenditure on Approved Agricultural
Projects
Deduction for Capital Expenditure on Approved Agricultural Projects
has been provided for under Schedule 4A of the Income
Tax Act 1967.
An “approved agricultural project” means an agricultural
project approved by the Minister of Finance. Only qualifying capital
expenditure incurred within a specific time frame and in respect of a
farm cultivating and utilising a specified minimum acreage for each
approved project as stipulated by the Minister of Finance will
qualify.
This incentive allows a person carrying on an approved agricultural
project to elect so that the qualifying capital expenditure incurred
by him in respect of that project is deducted from his aggregate
income, including income from other sources. Where there is
insufficient aggregate income, the unabsorbed expenditure will be
carried forward to subsequent years of assessment. Where he so elects,
he will not be entitled to any capital allowance or agricultural
allowance on the same capital expenditure.
The qualifying capital expenditure
eligible for deduction for the
purposes of this incentive is as follows:-
(a)
the clearing and preparation of land;
(b)
planting of a new crop related to an approved agricultural
project (replanting is deductable under section 34 (6)(d);
(c)
the construction of roads and bridges in estate areas;
(d)
the construction of buildings in estate areas under approved
agricultural projects or the construction of buildings on estate areas
for the welfare and housing of the relevant workers; and
(e)
the construction of a pond or the installation of an irrigation
or drainage system used for the purposes of an agricultural project.
Double Deduction for Promotion of Exports
Double Deduction of Export Credit Insurance Premiums
Tax Exemption on the Value of Increased Exports
Export Credit Refinancing Scheme
Industrial Building Allowance
Infrastructure Allowance
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