November-December . 2022 | @ Halal
Budget 2023
23 statutory income in the assessment year , and any unutilised allowances can be carried forward until they are fully utilised . iii . Incentives for halal industry players Halal industry players proposing to undertake projects in the designated halal parks are eligible for direct and indirect tax incentives .
Halal industry players are eligible to apply for ITA to set off 100 per cent of its qualifying capital expenditure incurred within five years against 100 per cent of the statutory income in the year of assessment , and any unutilised allowances can be carried forward until they are fully utilised .
These companies could also get an exemption from import duty and sales tax on raw materials used for the development and production of halal-promoted products , as well as a double deduction on expenses incurred in obtaining international quality standards . iv . Incentives for halal logistics operators There are also incentives available for halal logistics operators to help promote the halal industry and halal supply chain in Malaysia .
Eligible companies could benefit from either ITA or an income tax exemption of 100 per cent of the statutory income for five years , with any unabsorbed capital allowances and accumulated losses incurred during the pioneer period can be carried forward and deducted from the post-pioneer period income of the company ( subject to restrictions where applicable ). Applications for the tax incentives can be made to the respective agencies such as the Malaysian Investment Development Authority ( MIDA ) or HDC .
A step towards being a sustainable industry
Notwithstanding the attractiveness of the tax incentives in Malaysia , the benefit is very much limited to a subset of halal industry players , particularly regarding food production and contained within halal parks .
A literal translation of the word halal means ‘ permissible ’, reflecting the attitude and value beyond what we eat . It forms a standard of living , from what we wear to how we do things . If halal were to be addressed in a context that is more familiar to the community , perhaps one can relate to the environmental , social and governance pillars of ESG .”
A literal translation of the word halal means ‘ permissible ’, reflecting the attitude and value beyond what we eat . It forms a standard of living , from what we wear to how we do things . If halal were to be addressed in a context that is more familiar to the community , perhaps one can relate to the environmental , social and governance pillars of ESG .
A concept that has become popular over the recent years , ESG evolved upon the realisation that our way of life regarding the people and planet is not sustainable . Thus , people look for ways to be more responsible and get their ESG proposition right .
That way , people , including businesses , strive to create value , which has become the new normal . It becomes more compelling as investors also look for ways to align their values to their investment portfolios .
Similar to ESG , adherence to halal principles can become an effective vehicle to promote sustainability . Considering the strong overlap between halal and ESG , they can both complement and even converge .
While halal is administered under religious guidelines , halal and ESG ultimately share a mutual concept in ensuring the right processes are being put in place to comply with aspects of being sustainable and ethical .
In a complemental business environment , an ESG-compliant halal industry player is a step towards the right direction .
Given its economic potential , the outlook of venturing into halal products and obtaining the halal certificate must be beneficial to business owners .
Other sectors in focus generally include pharmaceutical products , healthcare , the banking system and cosmetics , which should also be given equally attractive tax incentives to encourage businesses to be halal-certified .
This would go hand-in-hand with Malaysia prioritising establishing its halal ecosystem to be of global standard .
Nik Nabilah Nik Amiruddin is the Associate Director of the Corporate Tax practice at KPMG in Malaysia .