Incentives for the biotechnology industry

1. Main Incentives for the Biotechnology Industry

A company undertaking biotechnology activity and has been approved with BioNexus Status by the Malaysian Biotechnology Corporation Sdn Bhd is eligible for the following incentives:
  1. 100% income tax exemption for 10 years commencing from the first year the company derives profit; or
  2. Investment Tax Allowance of 100% on the qualifying capital expenditure incurred within a period of 5 years and effective from 2 September 2006, a BioNexus status company will be given a concessionary tax rate of 20% on income from qualifying activities for 10 years upon the expiry of the tax emption period. This enhanced incentive is effective from 2 September 2006.
  3. Tax exemption on dividends distributed by a BioNexus status company;
  4. Exemption of import duty and sales tax on raw materials/components and machinery and equipment;
  5. Double deduction on expenditure incurred for R&D; and
  6. Double deduction on expenditure incurred for the promotion of exports;
  7. Effective from 2 September 2006, buildings used solely for the purpose of biotechnology activities will be eligible for Industrial Building Allowance to be claimed over a period of 10 years.

2. Incentives for Investment in a BioNexus Status Company

(i) Investment by a Parent Company to its Subsidiary

Efffectivefrom 2 September 2006, a company that invests in its subsidiary, whichis a BioNexus status company, is eligible for tax deduction equivalentto the amount of investment made in that subsidiary provided that theinvesting company own at least 70% of that subsidiary.

(ii) Investment by a Company or Individual to a BioNexus Status Company

Effectivefrom 2 September 2006, a company or an individual investing in aBioNexus status company is eligible for a tax deduction equivalent tothe total investment made in seed capital and early stage financing.

(iii) Tax Incentives for Mergers and Acquisitions with a Biotechnology Company

ABioNexus status company undertaking merger and acquisition with abiotechnology company is eligible for exemption of stamp duty and realproperty gain tax within a period of 5 years until 31 December 2011; and

Applications should be submitted to the Malaysian Biotechnology Corporation Sdn Bhd.