Msc Malaysia Status Substantial Activities
This is how MDEC term Substantial Activities in line with Msc Status 2.0
The below chart states the conditions for Msc Malaysia Status for non IP (non IP regime will be required to have substantive activities) derived incomes. This requirement is in accordance with the terms stated by OECD. With this requirement, most of the companies which were granted Msc Status previously will have to give up their pioneer status by 30 June 2021.
Substantial activities criteria
* An "adequate amount" of investment or annual business operating expenses must be incurred in Malaysia; and
* An "adequate number" of full-time jobs must provide employment in Malaysia.
Substantial Activities Table - sourced from MDEC
|MSC Malaysia Status Company||Tier 1||Tier 2||Tier 3|
|Percentage of income tax exemption||100 %||100 %||70 %|
|Exemption period||5 years||5 years||5 years|
|Extension of exemption period||5 years||5 years||May apply for extension provided that the company changed to Tier 1 or Tier 2 and fulfills the conditions imposed|
|Standard Conditions:||Tier 1||Tier 2||Tier 3|
|To be complied with within 24 months from the date of award of MSC Malaysia Status and thereafter during the exemption period:|
|(1)Location of approved MSC Malaysia Promoted Activities||Designated Premises within MSC Malaysia Cybercities or Cybercentres||Other Commercial Premises within MSC Malaysia Cybercities or Cybercentres||No matter where you locate|
|(2) Commencement of operation and undertaking of the approved MSC Malaysia Promoted Activities in Malaysia|
|(3) Paid-up capital||RM 500,000||RM 250,000|
|(4) Full time employees(comprising Knowledge Workers) with monthly base salary||(i) 50 full time employees with monthly base salary of RM5,000; OR (ii) 30 full time employees with monthly base salary of RM10,000||(i) 30 full time employees with monthly base salary of RM5,000; OR (ii) 20 full time employees with monthly base salary of RM8,000|
|* Data Centre: 5 full time employees with monthly base salary of RM5,000|
|(5) Annual operating expenditure and investment in fixed asset||RM3.5mil RM1mil or Data Centre: RM10 million||RM 1 million|
|(6) % of Malaysian Knowledge Workers (for the full time employees in (4) above)||70%||50%|
|*Note: The minimum amount paid up capital needs to be increased to RM2.5mil for the extension of exemption period for the second 5 years|
** Applicants are generally concerned because of the high numbers of employees requirement for year 3 as it is normally not easy to achieve. But there is a way to get through this huddle - you may want to contact us for that.