What is the Government Support for logistics services companies?

 The Malaysian Investment Development Authority (MIDA) supports the growth of companies undertaking integrated logistics services (ILS) by offering tax incentives for 5 years as below：

1.     Pioneer status (PS)

-       Tax exemption of 70% of statutory income.

 2.     Investment tax allowance (ITA)

-       60% of qualifying capital expenditure*

 *Qualifying capital expenditure means capital expenditure incurred on factory or any plant and machinery used in Malaysia in connection with and for the purposes of ILS.

Key takeaways:

You will understand: -

1.     What is the integrated logistics services?

2.     What are the qualifying criteria for ILS incentive?

3.     How to apply?

 Integrated logistics services (ILS)

ILS refers to a company that performs a variety of end-to-end logistics-related service activities like air, ocean, road and rail transportation, warehousing and other value-added services that make up a total logistics services package.

Main activities involved:

·         Warehousing

·         Transportation

·         Freight Forwarding

·         Distribution

·         Other value added services (Example: break bulking, palletising, labelling, etc)

 Qualifying criteria

1.     Locally incorporated

i.    Incorporated under Companies Act 2016 and resident in Malaysia; and

ii.   60% equity held by Malaysian.

2.     Eligible services

Must undertakes 3 principal activities:

i.    Freight forwarding

ii.   Warehousing

iii.  Transportation

and at least one of the following activities:

i.    Distribution

ii.   Supply chain management

iii.  Other related and value-added services/activities

-       Palletizing, product, assembly/installation, breaking bulk, consolidation, packaging/re-packaging, procurement, quality control, labelling/re-labelling, testing etc.

3.     Minimum Infrastructure to be owned by applicant company

i.    Commercial vehicles: 20 units

-     Motor vehicle for the purpose of carrying goods.

ii.   Warehousing facilities: 5,000 sq metres

-     To provide various facilities and services covering small dock-off depots to large scale warehouses and distribution centers.

Procedure for application

1.     Register an account under https://investmalaysia.mida.gov.my.

2.     Submit the application online for MIDA approval.

3.     Proceed to apply for tax incentive certificate after get approval from MIDA.

Reference

• Guidebook of Integrated Logistics Services

• https://www.mida.gov.my/wp-content/uploads/2020/07/20191220163458_BOOKLET-4-LOGISTICS-SERVICES.pdf

• Guidelines for application for tax incentives for Integrated Logistics Services (ILS) (31.03.2021)

• https://www.mida.gov.my/wp-content/uploads/2021/04/GD_ILS_31032021.pdf

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