Reinvestment Allowance (RA) is granted to manufacturing companies which have been in operation for at least 12 months and incur qualifying capital expenditure for the expansion of production capacity, modernisation and upgrading of production facilities, and diversification into related products and automation of production facilities.
The RA is in the form of an allowance of 60% of qualifying capital expenditure incurred by the companies for 15 consecutive years. The allowance can be utilised to offset against 70% of the statutory income in the year of assessment. In promoted areas such as Perlis, Sabah, Sarawak or the Eastern Corridor of Peninsular Malaysia, 100% of statutory income may be offset.
Accelerated Capital Allowance
In non-promoted areas, 100% of statutory income can be offset if the company attains a productivity level exceeding the level determined by the Ministry of Finance. Any unabsorbed allowance may be carried forward to the following years until it is fully utilised.
Accelerated Capital Allowance (ACA) Companies that reinvest in manufacture of promoted products are eligible for Accelerated Capital Allowance (ACA) upon the expiry of the RA. Companies will be given ACA on capital expenditure to be utilised within three years, in the form of an initial allowance of 40% in the first year, and an annual allowance of 20%. Applications should be submitted to the IRB accompanied by a letter from MIDA certifying that the companies are manufacturing promoted products.