New tax incentives to promote forest plantations

04 November 2010

New tax incentives to promote forest plantations

A new tax incentive regime will soon be in place to promote the development of large-scale forest plantation projects in Malaysia. The incentive is planned to cover both planting and harvesting phases.
The tax incentive will allow plantation companies to offset the costs during the planting period against the income from the harvest. The costs can be fully deducted from the aggregate income during the first 10 years of a new forest plantation project, and 5 years for an expanded forest plantation project.
In addition, forest plantation companies are allowed to claim a reinvestment allowance for approved plantation projects. The allowance will be credited through the Exempt Income Accounts for the purpose of declaring dividends. Dividends received by holding companies will not be subjected to taxation.