To promote the use of low-carbon vehicles, in 2023 the Malaysian Government introduced new tax incentives for companies renting non-commercial motor vehicles, including Electric Vehicles (EV).
Currently, a tax deduction is given to companies under Section 39 (1)(k) of the Income Tax Act 1967 based on the following conditions:
- If the cost of the vehicle does not exceed RM150,000, companies will receive a tax deduction on the rental amount up to RM100,000;
- If the cost of the vehicle exceeds RM150,000, companies will receive a tax deduction on the rental amount up to RM50,000.
In 2023, the Government proposed to increase the tax deduction to companies renting non-commercial motor vehicles including EVs up to RM300,000. This measure will be effective from 2023 until 2025.