News Straits Times Press, 16 October 2006

Malaysia approves RM1b food project tax incentives

THE Agriculture and Agro-based Industry Ministry had approved 184 applications worth RM1.1 billion for various tax incentives under food production projects as of last year, senior Agriculture Department officials said.
The loan approval was for the period from 2001 to last year. The ministry received a total of 230 applications for incentives worth RM2.3 billion during the period, they noted.

"The applications were for various tax incentives such as tax deduction and tax allowance offered by the ministry under food production projects," Agriculture Department deputy director general (operation) Salim Rafiee said.

He was speaking at a seminar on tax incentives for agro-based industries co-organised by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) and Kuala Lumpur Selangor Chinese Chambers of Commerce and Industry (KLSCCCI) last Saturday.

One example of incentive schemes for the sector is a tax deduction equivalent to the investment made by a company's subsidiary engaged in food production.

The subsidiary can get income tax exemption of 100 per cent on its statutory income for 10 years starting from the first year it was able to make profit.

Meanwhile, chartered accountant Owen Koh said the withdrawal of deduction on investment from adjusted income in the event of disposal of investment remains vague, although it had been unveiled by the authorities.

"However, from the present two-year limit set for capital allowance and reinvestment allowance, we believe that so long as the investment is kept for at least two years, no withdrawal of deduction on investment from adjusted income will be applied," explained Koh, managing partner of Malacca-based Owen KLCA.

He defined adjusted income as profit before deduction of capital allowances.