Crowe Chat Vol.2/2026

Introduction

The New Investment Framework (NIF) was introduced to reform Malaysia’s investment incentive regime by shifting towards a more targeted, performance‑based, and outcome‑driven approach. This marks a major investment reform led by the Malaysian Investment Development Authority (MIDA), transitioning from traditional tax‑based incentives to incentives linked to measurable outcomes such as job creation, research and development (R&D), and other high‑value economic contributions. 

The NIF aligns with the objectives of the National Investment Aspirations (NIA) and the New Industrial Master Plan (NIMP).

Implementation will begin on 1 March 2026 for the manufacturing sector, followed by the services sector in the second quarter of 2026, with the specific date for the latter to be announced.

“Malaysia’s investment landscape is undergoing a fundamental transformation driven by rapid technological change, global tax reforms, and the accelerating transition toward sustainable and low-carbon development. To respond to these shifts and to ensure that Malaysia remains a preferred and competitive investment destination in the region, the Government has introduced the New Incentive Framework (NIF).

The NIF represents a major shift in how Malaysia designs and administers investment incentives. It moves away from traditional profit-based tax holidays toward a modern, outcome-based incentive model that aligns national development priorities with emerging global standards, including the Global Minimum Tax (GMT) environment under OECD Pillar II.

Through the NIF, Malaysia is positioning itself as a preferred and regionally competitive investment destination, ready to attract the next generation of high-quality, future-ready investments.”

Source: https://www.mida.gov.my/media-release/new-incentive-framework-nif/

New Guidelines and Frequently Asked Questions (FAQ)

MIDA has issued the following documents providing detailed information on the NIF:

• Guidelines of Tax Incentives for New Investment in the Manufacturing Sector under the NIF dated 15 January 2026.
• FAQ on the NIF dated 19 January 2026.

Details of NIF (Manufacturing Sector)

The salient points are as follows:

Eligible Subsectors

Companies undertaking manufacturing activities within the following 15 subsectors are eligible to apply for incentives under the NIF:

1. Electrical and electronics (E&E);
2. Chemical and chemical products;
3. Pharmaceuticals;
4. Medical devices;
5. Aerospace;
6. Machinery and equipment (M&E);
7. Automotive;
8. Petroleum products and petrochemicals;
9. Oleochemicals and their derivatives;
10. Food production and processing;
11. Wood, paper, and furniture;
12. Textile, apparel, and footwear;
13. Strategic minerals-based products;
14. Rubber-based products; and
15. Metal.

Types of Tax Incentives

The NIF offers two (2) primary tax incentives, i.e. Special Tax Rate or Investment Tax Allowance that are mutually exclusive:

Option 1: Special Tax Rate (STR)

• A reduced corporate income tax rate for a specified period.
• Accumulated losses incurred may be carried forward for seven (7) consecutive years and deducted from the company’s post-incentive income.

Option 2: Investment Tax Allowance (ITA)

• ITA is a capital expenditure-based incentive that allows a company to offset a percentage of the qualifying capital expenditure (QCE) against its statutory income. This allowance is granted on QCE incurred within a specified period.
• Any unutilised allowance may be carried forward to subsequent years until it is fully utilised.

The company must submit its application to the MIDA before commencing operations for the proposed product or activity. The approval is conditional upon the company’s proposed commitments to ensure the delivery of the desired outcomes.

Companies are eligible to apply for incentives under the following categories, subject to meeting the specific requirements prescribed for each incentive:

1. Companies with shareholders’ funds of up to RM500,000 with at least 60% Malaysian equity; or
2. Companies with shareholders’ funds of above RM500,000 and not exceeding RM2.5 million with 100% Malaysian equity; and
3. 20% and above of the paid-up capital in respect of ordinary shares of the company cannot be owned directly or indirectly by a parent / related company having shareholders’ funds of more than RM500,000 or RM2.5 million.

Tax Incentive Mechanism

• Under the existing provisions in the Promotion of Investment Act, 1986 (PIA), once a company meets the criteria for promoted activities criteria and satisfies prescribed conditions, the incentive structure is relatively predictable.
• However, the NIF replaces this predictable model with a tiered, outcome-driven approach evaluated using the National Investment Aspirations (NIA) Scorecard. Approval under the NIF is conditional upon the company’s proposed commitments to ensure the delivery of the desired outcomes. Incentives are granted through provisions of the MITA.
• Under the NIF, each application is evaluated using the NIA Scorecard, which measures the project’s potential contribution to national objective. Incentives are linked to six (6) intended economic outcomes:
  1. Increasing economic complexity;
  2. Creating high-value job, high-income jobs for Malaysians;
  3. Extending domestic supply-chain linkages;
  4. Developing new and existing industrial clusters;
  5. Improving inclusivity; and
  6. Enhancing sustainability practices.
• During the application process, each indicator is assigned a score, which collectively determines the project’s overall investment quality. The final quality score then determines the quantum of the tax incentive, ensuring higher-impact projects receive greater support.

Tiered Incentive

A tiered incentive structure means that once an application is approved, the company may receive two distinct levels or "tiers" of incentives based on their level of compliance with set conditions as illustrated below:

Example 1: Special Tax Rate

Example 2: Investment Tax Allowance

Transition to NIF

• Existing incentive packages not governed under the PIA (e.g. the Johor-Singapore Special Economic Zone (JSSEZ), the Digital Ecosystem Acceleration (DESAC) scheme, the Global Services Hub tax incentive, etc.) will remain available until their respective application deadlines, as specified in each incentive’s guidelines.
• Companies that have been approved for incentives under the PIA before 1 March 2026, as well as companies approved for existing incentive package under the MITA prior to the implementation of the NIF, may continue to enjoy the incentives granted by the Government in accordance with the approved provision and terms.
• For the manufacturing sector, new incentive applications under the PIA will no longer be accepted from 1 March 2026. The final deadline for submitting PIA incentive applications for the manufacturing sector is 28 February 2026 at 3 p.m. (MYT). Companies with draft applications in the Invest Malaysia portal must complete the remaining steps and submit their applications before the deadline.
• Applications submitted before 1 March 2026 that are still under MIDA’s evaluation will continue to be assessed under the existing incentive framework, subject to prevailing Government policy.
• The incentives under the NIF are mutually exclusive with the Reinvestment Allowance (RA) under Schedule 7A of the MITA.

Introduction

Effective from the YA 2025, Section 82B of the MITA requires companies and limited liability partnerships (LLPs) to submit tax worksheets and financial information specified by the IRBM. To facilitate this requirement, the IRBM has introduced the MITRS, a digital platform designed to streamline and digitise the submission of tax-related documents. MITRS is accessible by taxpayers beginning 1 April 2025. 

Starting from YA 2026, implementation of MITRS will be extended to additional taxpayer categories, including unit trusts, property trusts, trust bodies, co-operative societies and real estate investment trusts / property trust funds.

Filing Programme

The IRBM has issued the Filing Programme for Documents Specified Under Section 82B Through MITRS for the YA 2026.

Details of the MITRS Filing Programme

• Submission of the required information and specified documents through MITRS by unit trusts, property trusts, trust bodies, co-operative societies and real estate investment trusts / property trust funds will be made available through the MyTax portal, according to the following implementation schedule:
  • Unit trusts / property trusts: Available from 1 July 2026
  • Trust bodies and co-operative societies: Available from 1 August 2026
  • Real estate investment trusts / property trust funds: Available from 1 September 2026
• Beginning from YA 2026, insurance companies and takaful operators are required to submit additional regulatory documents together with their audited or unaudited financial statements through MITRS. The required documents are as follows:
  • For Insurance Companies:
    • Insurance Companies Statistical System (ICSS); and
    • Risk Based Capital (RBC) documents
  • For Takaful Operators:
    • Takaful Operator Statistical System (TOSS); and
    • Risk Based Capital Takaful (RBCT) documents