Green Technology Incentive, Income Tax Act, 1967
GREEN Tax Incentives
Investment Tax Allowance (ITA)
Investment Tax Allowance (ITA) of 100% of qualifying capital expenditure incurred on green technology project for three (3) years from the date of first qualifying capital expenditure (CAPEX) incurred. The allowance can be offset against 70% of statutory income in the year of assessment. The unutilised allowances can be carried forward until they are fully absorbed.
Qualifying activities :
- Renewable Energy
– Solar*, Biomass, Biogas, Mini Hydro, and Geothermal - Energy Efficiency
- Green Building**
- Green Data Centre
- Integrated Waste Management
* Excluding Solar Project under Feed-in Tariff (FiT) scheme
** The qualifying capital expenditure can be backdated not earlier than 3 years from the date of application received by MIDA but not earlier than 1 January 2020.
Objectives of GITA
To encourage investment in green technology on project basis either for business purposes or own consumption
To motivate companies in acquiring green technology assets
To enhance the number of green technology service providers.
Groups Under Green Technology Tax Incentive
Green Investment Tax Allowance (GITA) Assets
Applicable for companies that acquire qualifying green technology assets and listed under MyHIJAU Directory.
Green Investment Tax Allowance (GITA) Project
Applicable for companies that undertake qualifying green technology projects for business or own consumption.
Green Income Tax Exemption (GITE) Services
Applicable for qualifying green technology service provider companies that are listed under the MyHIJAU Directory.
CRITERIA for GITA
Company must be incorporated under the Companies Act, 2016.
Company must achieve the following green results
- Conserve the use of energy and/or other forms of natural resources or promotes the use of renewable energy or recycles waste material resources
- Minimise the degradation of the environment or reduces greenhouse emission
- Promote health and improves environment
Company which has incurred first qualifying CAPEX before application made to MIDA is not eligible for this incentive.
For Green Building:
1. Company which has already obtained the Final Certificate or equivalent is not eligible for this incentive. The qualifying capital expenditure can be backdated not earlier than 3 years from the date of application received by MIDA but not earlier than 1 January 2020.
2. Company must submit application form together with the Provisional Green Building
Certificate (e.g. Design Assessment, Actual Assessment, etc.) and before the completion of the Green Project.
It is important to understand that the solar industry in Malaysia is producing 67 per cent of the 270MVH or renewable energy right now. Companies are installing more solar panel systems in Malaysia every day to take advantage of this green technology, save money and conserve the environment.
The solar power in Malaysia has all the elements for higher growth given the excellent conditions in the country. According to SEDA, the target for renewable energy generation is 2,080 MW or 11% by 2020 and 4,000 MW by 2030. The incentive will certainly add momentum to the adoption of green technology around the country.