With Budget 2026, the Malaysian Government introduced the New Incentive Framework (NIF) — a major shift in how tax incentives are granted to manufacturing investors. Instead of blanket incentives, NIF adopts a tiered, outcome-based approach, rewarding companies that contribute meaningfully to Malaysia’s economic growth, innovation, job creation, and sustainability goals.
This framework is aligned with two national strategies:
National Investment Aspirations (NIA)
New Industrial Master Plan (NIMP) 2030
The goal? To attract high-value, high-growth investments while strengthening Malaysia’s long-term economic resilience.
What Tax Incentives Are Available?
Under NIF, companies undertaking new manufacturing investments may choose one of the following incentives:
Special Tax Rate (STR)
Corporate tax rate reduced to between 0% – 15%
Valid for up to 15 years
Accumulated losses during the incentive period can be carried forward for 7 consecutive years
For projects in Less Developed Areas or qualifying small companies, special rates of up to 15% may apply.
Investment Tax Allowance (ITA)
Allowance of up to 100% of qualifying capital expenditure
Can offset 70% to 100% of statutory income
Available for up to 15 years
Unutilised allowance may be carried forward until fully used
⚠️ Note: Once an incentive option is chosen and approved, it cannot be changed.
Who Is Eligible?
Applicants must be:
Companies incorporated under the Companies Act 2016
Tax residents in Malaysia
Either new or existing companies undertaking new manufacturing projects
Eligible 15 manufacturing subsectors include:
Electrical & Electronics
Chemicals & Pharmaceuticals
Pharmaceuticals
Medical Devices
Aerospace
Machinery & Equipment (M&E)
Automotive
Petroleum Products and Petrochemicals
Oleochemicals and their derivatives
Food Production and Processing
Wood, Paper and Furniture
Textile, Apparel and Footwear
Strategic Minerals-based products
Rubber-based Products
Metal
Companies involved in biotechnology or recycled products may also qualify under relevant manufacturing categories.
How Are Incentives Evaluated?
All applications are assessed using the NIA Scorecard, which measures how well a project contributes to national priorities across six pillars:
Economic Complexity & Technology | Product sophistication, R&D spending, automation, and Industry 4.0 adoption. |
High-Value Job Creation | Skilled workforce, salary levels, and Malaysian participation in managerial roles. |
Domestic Linkages | Local sourcing, vendor development, training investment, and academia collaboration. |
| Industrial Development | Patents, R&D commercialisation, and alignment with targeted sectors. |
| Inclusivity | Women in leadership, employment of vulnerable groups, internship opportunities, and local workforce share. |
| Sustainability | Green practices, waste management, renewable energy use, and efficient water consumption. |
Projects with stronger commitments receive higher-tier incentives.
Projects with stronger commitments receive higher-tier incentives.
Application Process Overview
Pre-consultation with MIDA
Submit application via InvestMalaysia portal
Evaluation using NIA Scorecard
Issuance of Principle Approval Letter
Annual compliance reporting throughout incentive period
Applications under this framework are accepted starting 1 March 2026.
Important: Global Minimum Tax (GMT)
Malaysia implemented the Global Minimum Tax (15%) starting 2025 in line with OECD Pillar Two rules.
Multinational groups with global revenue exceeding €750 million may be subject to a top-up tax if their effective tax rate falls below 15% in Malaysia.
This is a critical consideration when structuring investment incentives.
Why Professional Advisory Matters
NIF is highly technical and outcome-driven. Successful applications depend on:
Proper project structuring
Strong NIA scorecard positioning
Compliance documentation
Annual reporting obligations
Alignment with sustainability and workforce requirements
Early planning is essential to maximise incentives and avoid approval delays.
Need Help Navigating NIF?
At AdrianYeo Tax KL, we assist businesses with:
- Incentive eligibility assessment
- NIF application preparation
- Tax structuring & planning
- Compliance support
- Manufacturing investment advisory
Contact us today to explore how your manufacturing project can benefit from Malaysia’s New Incentive Framework.