Malaysia Reveals New Tax Incentives for Shipbuilders
In an effort to attract investments into the Malaysian shipbuilding and ship repairing industry, the country has decided to introduce new incentives for the sectors, according to the Malaysian Ministry of International Trade and Industry.
The incentives would provide new companies with either a Pioneer Status with 70% of Income Tax Exemption on statutory income for a period of 5 years or Investment Tax Allowance of 60% on the qualifying capital expenditure incurred within 5 years from the date the first qualifying capital expenditure is incurred.
Furthermore, existing shipbuilding and ship repairing companies are offered an Investment Tax Allowance of 60% on the additional qualifying capital expenditure incurred within a period of 5 years.
Previously, the incentives for shipbuilding and ship repairing were for projects located in the Eastern Corridor, Sabah, Sarawak, Perlis, Kelantan, Terengganu, Pahang and the district of Mersing in Johor.
Companies were eligible for Pioneer Status with income tax exemption of 100% of statutory income for a period of 5 years or Investment Tax Allowance of 100% on qualifying capital expenditure incurred within a period of 5 years, however, the incentives ended in 2010.
Currently there are 100 registered shipyards in Malaysia, in which 39 are located in West Malaysia and 61 in East Malaysia. In West Malaysia, the main shipyards are located in Lumut (Perak), Port Klang (Selangor), Kemaman (Terengganu) and Pasir Gudang (Johor). In East Malaysia, Sibu (Sarawak) is the main shipbuilding hub with a total of 40 small to medium-sized companies.
There are 6 large shipyards in the country which have repairing capabilities of more than 600 tons displacement, namely, Malaysia Marine and Heavy Engineering (MMHE), Boustead Naval Shipyard, Sabah Shipyard, Sapura Kencana, Nam Cheong and Muhibbah Marine Engineering.