Tax incentives set to benefit solar players
PETALING JAYA: Solar power-related players in Malaysia are among the key beneficiaries of Budget 2020, on the back of tax incentives aimed at boosting the Malaysian green economy.
Budget 2020, which was tabled by Finance Minister Lim Guan Eng last Friday, introduced a 70% income tax exemption of up to 10 years for companies undertaking solar leasing activities.
Solar leasing basically refers to the leasing of photovoltaic panels from providers, without incurring an initial capital to purchase and install the system. The cost of the installed solar panel system would be paid monthly over a specific number of years, typically reflected in the monthly electricity bill.
Budget 2020 has also extended the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) incentives until 2023.
Business players have welcomed Budget 2020’s tax incentives, which are expected to encourage greater adoption of renewable energy in Malaysia.
This is in line with the government’s intention to generate 20% of Malaysia’s energy consumption from renewable sources by 2025.
Glove maker Supermax Corp Bhd’s founder and president Datuk Seri Stanley Thai said the 70% tax exemption would encourage companies to install solar panels on the rooftop of their plants and facilities.
CIMB group chief executive officer Tengku Datuk Seri Zafrul Aziz has described the 70% tax exemption for solar leasing technology as “generous”, while OCBC Bank (M) Bhd chief executive officer Datuk Ong Eng Bin said the bank is “heartened” by the incentives and exemptions provided for the green investments.
When asked about the GITA and GITE incentives, an equity analyst told Starbiz that the impact on earnings for several listed companies already involved in renewable energy such as solar power would be limited. “Cypark Resources Bhd, for example, will see a limited impact as the impact of such incentives are already factored into our earnings forecast,” she said.
However, Solarvest Holding Bhd, which is en route to an Ace Market listing, said that by extending the GITA and GITE incentives until 2023, companies like Solarvest would be able to embark on a greater business expansion and longterm sustainability planning.
“In addition, the 10-year 70% income tax exemption for solar leasing activities, will definitely help spur interest and encourage more commercial and industrial participation in the adoption of renewable energy,” said Solarvest CEO Davis Chong.