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The framework is also expected to expand to the services sector in Q2 2026.
Malaysia will roll out its New Incentive Framework (NIF) from 1 March 2026, starting with the manufacturing sector before expanding to services in the second quarter, as part of efforts to sharpen the country’s competitiveness and economic resilience.
Under the framework, announced by Ministry of Investment, Trade and Industry (MITI), businesses can choose between two mutually exclusive tax incentives for each qualifying project:
Special Tax Rate (STR)
The STR is a special corporate income tax rate for a specified period.
Investment Tax Allowance (ITA)
The ITA is a capital expenditure-based incentive based on the percentage of Qualifying Capital Expenditure (QCE) that can be used to offset against statutory income.
Rather than offering broad-based benefits, incentives will be tied to measurable commitments under NIF. Applications will be assessed using the National Investment Aspirations (NIA) Scorecard, which evaluates an investment’s contribution to economic value creation, local talent development, domestic supply chains, technology transfer, and sustainability.
Companies may apply for incentives based on the prescribed categories, subject to compliance with the relevant requirements as detailed in the NIF Implementation Guidelines for the Manufacturing Sector.
The NIF adopts a tiered, outcome-based structure aligned with Malaysia’s wider industrial goals under the New Investment Policy and the New Industrial Master Plan 2030 (NIMP 2030).
The framework is part of a broader incentive reform led by the Ministry of Finance’s Taskforce on Incentive Review (TFIR), which was set up to restructure Malaysia’s investment incentive system, streamline administration, and align policies with evolving global tax standards, including the Global Minimum Tax. The taskforce brings together agencies such as MITI, the Inland Revenue Board, MIDA, Bank Negara Malaysia, and other industry stakeholders.
In tandem with the rollout, MITI will cease accepting new manufacturing incentive applications under the Promotion of Investments Act 1986 (PIA 1986), with the final submission deadline set for 28 February 2026 at 3.00pm. Existing approvals, however, will remain valid and unaffected.
Further details on eligibility requirements, assessment parameters, and application procedures are available through the official portals of MITI and the Malaysian Investment Development Authority (MIDA).
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Lead image / MIDA Facebook
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