EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
Recent Searches
Guidelines for Global Trading Centre (GTC) incentive
In Budget 2021, to enhance and simplify tax incentives for trading activities, a new tax incentive was proposed in the form of a GTC with a concessionary tax rate of 10% for a period of up to 10 years (made up of an initial five years, extendable for a further five years) (see Take 5: Malaysia Budget 2021).
Following the above, MIDA has recently published on its website the “Guidelines on Incentive for Setting up a Global Trading Centre (GTC)” (GTC Guidelines), which are effective from 1 January 2021.
A GTC is a locally incorporated company that uses Malaysia as its international trading base to undertake strategic sourcing and procurement and distribution of raw materials, components and finished products to its related and unrelated companies in Malaysia and abroad. To qualify for the GTC incentive, the company must fulfil the conditions outlined in Appendix III to this Alert.
Similar to the PH 3.0 incentive, the GTC Guidelines stipulate that applications for the incentive must be received by MIDA between 1 January 2021 and 31 December 2022. The applications will also be evaluated and approved by the NCI.
An approved GTC must comply with the stipulated conditions (per Appendix III to this Alert) throughout the incentive period. In the event the company fails to comply with the conditions in any YA during the incentive period, the company may not enjoy the concessionary tax rate for that YA.
The GTC Guidelines also explain the process to apply for the incentive, surrender the incentive and/or apply for an extension of the incentive period.
Further details are available on the MIDA website [Forms & Guidelines - MIDA | Malaysian Investment Development Authority > Services sector > Regional operations > Global Trading Centre (GTC)]
APPENDIX III
Eligibility criteria to qualify for the GTC incentive
|
Criteria |
|
|
|---|---|---|
|
Qualifying company |
|
|
|
Qualifying activity |
Uses Malaysia as its international trading base to undertake strategic sourcing, procurement and distribution of raw materials, components and finished products to its related and unrelated companies in Malaysia and abroad |
|
|
Paid-up capital |
RM1 million |
|
|
Annual sales turnover from qualifying activities |
RM300 million |
|
|
Annual operating expenditureNote 2 for qualifying activities |
RM1.5 million |
|
|
Number of high value jobs with a basic salary of at least RM5,000 per month
|
15 |
|
|
Location |
Must operate in a Licensed Manufacturing Warehouse (LMW), Free Zone (FZ) and/or bonded warehouse |
|
|
Others |
|
|
Note 2:
Expenses incurred to carry out day-to-day operations of the GTC which are related to the core income-generating activities of the GTC. The amount will be based on the operating expenditure reflected in the company’s audited financial statements, excluding interest, depreciation and other expenses which are not incurred for the production of income from qualifying activities.