Renewable Energy Incentives in Malaysia 2023
Amidst the pressing global challenges posed by climate change, governments worldwide are placing an ever-growing emphasis on harnessing the potential of renewable energy sources. With a steadfast commitment to sustainability, Malaysia has made significant strides in promoting renewable energy adoption and has introduced a range of incentives to encourage the growth of the sector. In this article, we will explore the renewable energy incentives available in Malaysia and highlight the opportunities they present for businesses and individuals alike.
Discover how your business can seize the advantages presented by these incentives, from substantial cost savings to enhanced sustainability efforts.
Green Investment Tax Allowance (GITA) on Green Assets
One of the key incentives introduced by the Malaysian government is the Green Investment Tax Allowance (GITA) on Green Assets. Under this scheme, companies investing in green assets, such as solar panels and other renewable energy assets, are eligible for a tax allowance. The allowance is equivalent to 100% of the qualifying capital expenditure incurred within a five-year period. This incentive not only encourages companies to invest in renewable energy infrastructure but also helps to offset the initial costs associated with such investments.
In addition to the GITA, the government also offers capital allowance benefits for businesses investing in renewable energy. Companies that purchase solar systems outright can claim capital allowances based on a percentage of the system's initial cost. This allows businesses to deduct a significant portion of their investment from their taxable income, providing substantial tax relief and enhancing the financial viability of renewable energy projects. Along with these double tax benefits, companies can also enjoy significant reductions in their electricity bills and enhance their sustainability efforts by adopting clean energy, thereby further improving their overall operations.
GITA on Green Projects
In addition to incentivising investments in green assets, the Malaysian government also offers the GITA on Green Projects. This initiative provides a tax allowance to companies engaged in green projects, including the development and construction of renewable energy facilities. Companies involved in the production of solar power, wind energy, biomass, and other forms of clean energy can benefit from this incentive. The tax allowance is also set at 100% of the qualifying capital expenditure incurred during the project implementation period, further encouraging the growth of the renewable energy sector.
To be eligible for this incentive, companies must meet the criteria set by the Malaysian Investment Development Authority (MIDA) and the Malaysian Green Technology and Climate Change (MGTC). These criteria typically include the use of approved green technology, compliance with environmental regulations, and adherence to industry guidelines. It is important for companies to ensure that their projects meet these eligibility requirements before applying for the GITA on Green Projects.
GITE on Green Services
Recognising the crucial role of service providers in supporting the development and maintenance of renewable energy infrastructure, the Malaysian government has extended the incentives to include Green Services under the GITE (Green Income Tax Exemption) schemes. Under this initiative, companies providing services related to renewable energy, such as installation, maintenance, and consultancy, are eligible for a tax allowance. This initiative aims to foster a robust ecosystem of service providers, thereby facilitating the smooth operation and maintenance of renewable energy projects across the country.
GITE provides several benefits to service providers in the renewable energy sector. Among others, it helps reduce the financial burden associated with the initial investment in equipment, training, and other necessary resources to provide high-quality services. The tax allowance allows companies to recoup a significant portion of their capital expenditure, making their services more affordable and competitive. This assistance encourages a greater number of companies to embark on their renewable energy journey.
How to Apply for Green Technology Tax Incentives
Applying for green technology tax incentives in Malaysia is a straightforward process. Interested parties must first ensure that their projects or investments meet the eligibility criteria outlined by the Malaysian Investment Development Authority (MIDA) and the Malaysian Green Technology and Climate Change (MGTC).
These criteria typically include the use of approved green technology, compliance with environmental regulations, and adherence to the relevant industry guidelines. Once the eligibility criteria are met, applicants can submit their applications to MIDA, providing the necessary documentation and information to support their claims. It is crucial to ensure that all relevant details and supporting documents are included to facilitate a smooth application process.
In brief, applying for green technology tax incentives may include these steps:
Before starting the application process, it is crucial to determine whether your project or investment meets the eligibility criteria for green technology tax incentives. Review the guidelines provided by MIDA and the Malaysian Green Technology and Climate Change (MGTC) to ensure that your project aligns with their requirements. Typically, these criteria include the use of approved green technology, compliance with environmental regulations, and adherence to relevant industry guidelines.
Gather all the necessary documentation and information required for the application. This may include project proposals, financial statements, environmental impact assessments, technical specifications, and any other relevant supporting documents. Ensure that the documentation is complete, accurate, and up-to-date to facilitate a smooth application process.
Fill Out Application Forms
Obtain the application forms from the designated government agencies, such as MIDA. Fill out the forms carefully, providing all the required details and ensuring accuracy. Be prepared to provide information about your company, project description, investment details, and any other relevant information as specified in the application forms.
Include Supporting Documents
Attach all the supporting documents as required by the application forms. These may include financial statements, project proposals, environmental impact assessments, feasibility studies, licenses, permits, and any other documents requested by the authorities. Ensure that the supporting documents are organised and clearly labeled for easy reference.
Once the application forms and supporting documents are complete, submit them to the designated government agency responsible for processing green technology tax incentives. Pay attention to any specified submission deadlines and follow the instructions provided for submission. It is advisable to keep copies of all the documents submitted for your records.
Review and Evaluation
After submission, the government agency will review your application and evaluate its eligibility for green technology tax incentives. The evaluation process may involve a thorough assessment of the project's environmental impact, financial viability, and compliance with regulations. The authorities may request additional information or clarification during this stage.
Approval and Notification
If your application meets the eligibility criteria and is approved, you will receive notification from the government agency. The notification will outline the specific incentives you are eligible to receive, including the tax allowances or benefits. It is important to carefully review the notification and seek clarification if needed.
Compliance and Reporting
Once approved, it is essential to comply with the conditions and requirements outlined in the notification. This may include periodic reporting on the progress of the project, adherence to environmental standards, and fulfilling any other obligations specified by the authorities. Non-compliance may result in the revocation or suspension of the incentives.
Enjoy Double Tax Benefits with Progressture Solar
Progressture Solar is a leading Clean Energy provider and investor in Malaysia. By purchasing our solar system outright, you will be eligible for double tax incentives provided by the government. With Progressture Solar, you can significantly reduce your electricity expenses, optimise your returns, and actively contribute to a more sustainable future.
Furthermore, our team ensures a seamless MIDA application process, guiding you from the initial stages to the final completion. Let's explore the tax benefits you can enjoy by choosing Progressture Solar for your renewable energy needs.
Green Investment Tax Allowance (100% QCE, 70% offset against income)
When you invest in Progressture Solar's solar system, you can take advantage of the Green Investment Tax Allowance (GITA) offered by the Malaysian government. This incentive allows you to receive a tax allowance equivalent to 100% of your qualifying capital expenditure (QCE) incurred on green assets, such as solar panels. Additionally, you can offset up to 70% of this allowance against your taxable income. By leveraging the GITA, you not only reduce your upfront investment costs but also enjoy substantial tax savings.
Capital Allowance (34% initial, 14% annual)
In addition to the GITA, Progressture Solar enables you to benefit from the capital allowance. By purchasing our solar system outright, you can claim a capital allowance of 34% in the first year based on the initial cost of the system. This means that a significant portion of your investment can be deducted from your taxable income in the first year itself. Furthermore, you can continue to claim a capital allowance of 14% annually on the remaining value of the system. These capital allowances provide further tax relief and enhance the financial attractiveness of your renewable energy investment.
By taking advantage of the double tax incentives offered by Progressture Solar, you can significantly reduce your tax liability and increase your returns on investment. The savings generated from lower electricity costs combined with the tax benefits allow you to optimize the financial performance of your solar system.
Furthermore, investing in solar power contributes to a greener future. By harnessing the clean and renewable energy provided by the sun, you reduce your reliance on fossil fuels and lower your carbon footprint. Progressture Solar's systems are designed to maximize energy efficiency and environmental sustainability, aligning with the Malaysian government's commitment to promoting renewable energy and combating climate change.
Make the smart choice today and partner with Progressture Solar to enjoy double tax incentives, save on electricity costs, and contribute to a greener future. Contact us now for more information on how you can benefit from our solar systems and the tax incentives available. Take a step towards a sustainable and financially rewarding future with Progressture Solar.