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Malaysian Investment Development Authority states that eligibility for Pioneer Status and Investment Tax Allowance is based on high value-adding, technological usage and industrial linkages.

Pioneer Status A company granted Pioneer Status enjoys a five-year partial exemption from income tax payment. It pays tax on 30 per cent of its statutory income, with the exemption period commencing from its production day (defined as the day its production level reaches 30 per cent of its capacity).

Unabsorbed capital allowances and accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer income of the company.

Investment Tax Allowance As an alternative to Pioneer Status, a company may apply for Investment Tax Allowance (ITA).

A company granted ITA is entitled to an allowance of 60 per cent on its qualifying capital expenditure (factory, plant, machinery or other equipment used for the approved project) incurred within five years from the date the first qualifying capital expenditure is incurred.

The company can offset this allowance against 70 per cent of its statutory income for each year of assessment.

Any unutilised allowance can be carried forward to subsequent years until fully utilised. The remaining 30 per cent of its statutory income will be taxed at the prevailing company tax rate.