Halal Industry Tax Incentives: Halal Parks and Logistics Operators

Introduction

The halal industry offers growing investment opportunities in Malaysia. The Government provides tax incentives to encourage halal projects, including those carried out in designated Halal Parks and by halal logistics operators. This article summarises the main incentives based on the MIDA policy booklet and Budget Appendices.

Incentives for projects in Halal Parks

Companies proposing projects in designated Halal Parks qualify for one of the following options:

• full income tax exemption (100%) for up to 10 years; OR
• investment tax allowance (ITA) of 100% on qualifying capital expenditure within 5 years.

(Source: MIDA Policy Booklet, Chapter 2.)

Incentives for halal logistics operators

For halal logistics operators:

• 100% income tax exemption for 5 years;
• unabsorbed capital allowances may be carried forward after the pioneer period;
• accumulated losses are carried forward for up to 7 years.

(Source: MIDA.)

Scope of qualifying halal products

Qualifying halal products include:

• specially processed food;
• pharmaceuticals;
• cosmetics and personal care products;
• livestock and meat products;
• halal ingredients.

This scope is referenced in Appendix 9 of Budget 2017, and was extended to nutraceuticals/probiotics from 22 October 2016.

Application and certification

• Incentive applications are made through MIDA/HDC.
• JAKIM halal certification (www.halal.gov.my) is a related requirement.

Frequently Asked Questions (FAQ)

Q. What are the incentives for projects in Halal Parks? A. Full income tax exemption (100%) for up to 10 years, OR ITA of 100% on qualifying capital expenditure within 5 years (MIDA Policy Booklet, Chapter 2).

Q. What is the treatment for halal logistics operators? A. 100% income tax exemption for 5 years; unabsorbed capital allowances may be carried forward after the pioneer period; accumulated losses are carried forward for up to 7 years.

Q. Which halal products qualify? A. Specially processed food, pharmaceuticals, cosmetics and personal care products, livestock and meat products, and halal ingredients (Appendix 9 of Budget 2017; extended to nutraceuticals/probiotics from 22 Oct 2016).

Q. How do I apply? A. Through MIDA/HDC, with JAKIM halal certification (www.halal.gov.my) as a related requirement.