Tax Incentive for Carbon Capture Storage

Last updated: 17 May 2023

In 2023, the Malaysian Government proposed a tax incentive for Carbon Capture and Storage (CCS) to limit CO2 emissions using CCS technologies while ensuring the achievement of the Low Carbon Nation Aspiration by 2040. 

The proposed tax incentive scheme includes two mechanisms: 

  • companies undertaking in-house CCS activity shall receive Investment Tax Allowance of 100% for 10 years, full import duty and sales tax exemption on the equipment used for CCS technology from 2023 to 2027, and tax deduction for pre-commencement expenses within 5 years from the start of operations; 
  • companies undertaking CCS services shall receive Investment Tax Allowance of 100% for 10 years, full import duty and sales tax exemption on equipment for CCS technology from 2023 to 2027, and tax exemption of 70% on statuary income for 10 years. In addition, a tax deduction is also given for service fees incurred. 

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