Malaysia offers tax reduction incentives for investments in production and activities under the Promotion of Investment Act, 1986 and the Income Tax Act, 1967. The incentives are provided to give partial (limited) or full relief from income tax payments. In addition, Malaysia also offers incentives in the form of exemptions in duty and sales tax under the Customs Act, 1967, Sales Tax Act, 1972 and Excise Duty Act, 1976.

For agriculture activities, special features in granting incentives are:-

1. Definition of company:

Under the Promotion of Investment Act, 1986, the term ‘company’ in relation to agriculture includes:
• Agro-based co-operatives, societies and associations.
• Sole proprietorships and partnerships engaged in agriculture.

2. Criterion for determination of production day is based on either:

• First sale or
• 50% of average stabilized yield.

3. Criterion for granting incentives is based on ‘promoted agricultural activities’.

These incentives come under the purview of the Malaysian Industrial Development Authority and the Ministry of Agriculture. Final authority in granting these incentives lies with the Ministry of Finance.