“ Under the revamped GITA tax incentive , a company may qualify for a GITA of 100 per cent or 60 per cent of qualifying capital expenditure ( QCE ) to be offset against 100 per cent or 70 per cent of the statutory income . The incentive period varies from three to 10 years , depending on the respective qualifying activities and tiers .”

With natural disasters such as floods and heatwaves occurring with greater intensity in Malaysia and worldwide , causing significant disruptions to the economy and people ’ s livelihoods , we must take decisive actions and measures to progress .

In line with the government ’ s ambition to achieve carbon neutrality by 2050 , the existing green tax incentives , notably the Green Investment Tax Allowance ( GITA ) offered by the Malaysian Investment Development Authority ( MIDA ) for investments in qualifying green projects and assets , have recently been revamped and extended to Dec 31 , 2026 ( previously due to expire Dec 31 , 2023 ), in the Budget 2024 proposals on Oct 13 , 2023 .

Consequently , this would be a timely opportunity for companies to consider increasing their investments into qualifying green projects or initiate purchases

of green assets to leverage the available green tax incentives . This will not only help to reduce the companies ’ carbon footprint but can also potentially result in cost savings in the long term .

Under the revamped GITA tax incentive , a company may qualify for a GITA of 100 per cent or 60 per cent of qualifying capital expenditure ( QCE ) to be offset against 100 per cent or 70 per cent of the statutory income . The incentive period varies from three to 10 years , depending on the respective qualifying activities and tiers .

UNABSORBED BUSINESS LOSSES

But what happens when the company incurs losses in the initial years ? In this scenario , the unutilised GITA can be carried forward indefinitely until fully absorbed . In contrast , the unabsorbed business losses can only be carried forward for up to 10 consecutive years of assessment ( YA ).

Other currently available green tax incentives include Green Investment Tax Exemption ( GITE ) for solar leasing , which provides a tax exemption of 70 per cent on statutory income for solar leasing activities .

The incentive period has also been extended to Dec 31 , 2026 , depending on the solar plant ’ s capacity ( megawatt or

MW ). For example , a capacity of > 10MW to ≤30MW comes with a 10-year incentive period .

It is also worth noting that the date of the first QCE incurred ( for GITA ) and the date of the first invoice issued ( for GITE solar leasing ) must be on or after the date of application received by MIDA , otherwise , the company will not be eligible for the tax incentive .

Another new tax measure proposed in Budget 2024 to encourage taxpayers to comply with ESG practices is a proposed tax deduction of up to RM50,000 for each YA for ESG-related expenditures .

These expenditures include preparing reports related to ESG reporting by companies listed on Bursa Malaysia , financial institutions regulated by Bank Negara Malaysia , and e-invoicing implementation .

The proposal is effective from YA 2024 to YA 2027 . This additional tax deduction , albeit not substantial , should help alleviate some of the costs of ESG compliance , especially as businesses transition from voluntary to mandatory sustainability reporting requirements .

In addition to the above , keeping an eye on the potential implementation of carbon tax in Malaysia is crucial . A voluntary carbon market exchange , namely the Bursa Carbon Exchange ( BCX ), was