Commercial & Industrial

WHAT IS CAPITAL ALLOWANCE (CA)?

Capital Allowance (CA) is a tax benefit provided to businesses (both Sdn Bhd & Bhd) that invest in solar installations. It is subtracted from the "adjusted income" for the expenses incurred on solar installation as outlined in Schedule 3 of the Income Tax Act 1967. Solar installations are categorized as "plant and machinery," and the expenditure is eligible for Initial Allowance (20%) in the first year and Annual Allowance (14%) for subsequent years.

WHAT IS GREEN INVESTMENT TAX ALLOWANCE (GITA)?

Since 2018, the Malaysian Government has introduced the Green Investment Tax Allowance (GITA) to incentivize the adoption of green technologies. Under this initiative, a 100% allowance is granted on qualifying capital expenditure for approved green technology assets purchased until 31 December 2023. This allowance can offset 70% of the statutory income in the assessment year, with any unused allowances carried forward for future absorption. Eligible projects include renewable energy, energy efficiency, integrated waste management, and green building/data centers. Companies investing in qualifying green technology assets must adhere to specific environmental standards, including minimizing environmental degradation, promoting health and environmental improvement, and conserving energy and natural resources. The deadline for GITA applications is 31 December 2023.

For more details on GITA eligibility, please refer to the following link:
https://www.myhijau.my/green-incentives/

HOW MUCH WILL I SAVE?

In summary, businesses can benefit from a double tax deduction for solar installation expenses. The tax savings are as follows:

• For companies in the 25% tax bracket (adjusted income above RM500,000), they can recover 50% of the solar panel installation costs through these tax incentives.
• For companies in the 20% tax bracket (adjusted income below RM500,000), they can recover 40% of the solar installation costs.