Flagship & Qualifying Activities

Downstream Activities – Manufacturing

Medium & Heavy Industries
  • Urea and ammonia production
  • Solar glass
  • Ship building and repairs
  • Marine supply base and fabrication yard
  • Iron ore palletising
  • Hot briquette iron
  • Combined cycle power plant

Tax Incentive

  • Full tax exemption on statutory income for 10 years; or Investment Tax Allowance of 100% on qualifying capital expenditure for 5 years – can be offset against 100% of statutory income, subject to qualifying activities/ products under the Promotion of Investment Act 1986.

For ship building and repairs industry, incentives are offered under Income Tax Act 1967 as follows:

  • Full tax exemption on statutory income for 5 years; or
  • Investment Tax Allowance of 100% on qualifying capital expenditure for 5 years – can be offset against 100% of statutory income

Guidelines & criteria for application for SDC tax incentives

Tourism Projects
A. Hotels & Resorts

1. Companies undertaking new investments in 4-5 star hotels and resorts within the Kinabalu Gold Coast Enclave (KGCE) are eligible to
apply for:

  • Full tax exemption on statutory income for a period of 10 years; or Investment Tax Allowance of 100% on qualifying capital expenditure incurred within a period of 5 years. The allowance can be used to offset against 100% of statutory income for each year of assessment.
  • Exemption on import duty and sales tax subject to current policy; and
  • Stamp duty exemption on land acquired for development.

2. The hotel/ resort must be registered and certified by the Ministry of Tourism Malaysia (MoTour).
3. The hotel/ resort must obtain approval for establishment from MoTour before submission of application to SEDIA.
4. The incentives are applicable for applications received by SEDIA from 1 January 2013 until 31 December 2020.
5. Applications for item 1.i. and iii. should be submitted using Form SDC_KGCE-H&T. Form SDC_ID&ST should be used for item 1.ii.
6. Applications including supporting documents for item 2. & 3. should be submitted to SEDIA.

B. Creative Clusters

1. Companies undertaking new investments in creative art and design institutions within the KGCE are eligible to apply for:

  • Full tax exemption on statutory income for a period of 5 years; or Investment Tax Allowance of 100% on qualifying capital expenditure incurred within a period of 5 years. The allowance can be offset against 100% of statutory income for each year of assessment; and
  • Full exemption on import duty and sales tax exemption subject to current policy.

2. Definition of art and design academy:

  • Art/ design academy is a school dedicated for studies intended to provide technical knowledge and intellectual skills in design and creative arts, taught by professional designers. The school provides facilities such as design studios for fashion design and other design related activities.
  • School of Performing Arts is an institution for arts education including dance, theatre, musical theatre, design and production (technical theatre) etc, taught by professional artists. The school features facilities such as dance studios, music labs, and dedicated space for theatre, art programmes.

3. Companies operating the school must be incorporated in Malaysia under the Companies Act, 1965.
4. The school must be registered and accredited by Ministry of Higher Education (MOHE).
5. The school must obtain approval for establishment from MOHE before submission of application to SEDIA.
6. Applications for item i. and ii. should be made by using the SDC_KGCE-CC Form and SDC_ID&ST Form, respectively.
7. Applications including supporting documents for item 5. should be submitted to SEDIA.

PRIVATE LEARNING INSTITUTE & SKILL TRAINING CENTRES

1. Companies undertaking new investments in private higher learning institutions as well as training centres located within the Sandakan Education Hub (SEH) are eligible to apply for:

  • Full tax exemption on statutory income for a period of 10 years; or Investment Tax Allowance of 100% on qualifying capital expenditure within a period of 5 years. The allowance can be offset against 100% of statutory income for each year of assessment; and
  • Exemption on import duty and sales tax exemption on equipments and machinery used, subject to current policy.

2. Definition of private higher learning institution:
Private higher learning institution means not a government university, or college, or campus, or any other autonomous institution that offers a level of academic education and professional training that leads to full academic and or professional qualifications and competence.
3. Companies operating the school must be incorporated in Malaysia under the Companies Act, 1965.
4. The school must be registered by Ministry of Higher Education (MOHE).
5. The school must obtain approval for establishment from MOHE before submission of application to SEDIA
6. The incentives are applicable for applications received by SEDIA from 1 January 2013 until 31 December 2020.
7. Applications for private learning institutions and skill training centres should be made by using the SDC_SEH-IPSCU Form and SDC_SEH-STC Form, respectively.
8. Application for item ii. should be made using the SDC_ID&ST Form. 9. Applications including supporting documents for item 5. should be submitted to SEDIA.

Downstream manufacturing activities in specific clusters
  1. The Industrial Coordination Act, 1975 requires companies engaging in any manufacturing activity with shareholders’ funds of RM2.5million and above or employing 75 or more full-time paid employees to obtain a Manufacturing Licence.
  2. The Promotion of Investments Act, 1986 provides for companies proposing to manufacture promoted products or engage in promoted activities to apply for Pioneer Status or Investment Tax Allowance.
  3. The incentives are only applicable for companies engaged in specific qualifying activities, located in the designated SDA, as set out in the above table.
  4. The incentives are applicable for applications received by SEDIA from 1 January 2013 until 31 December 2020.
  5. Applications for tax exemption and investment tax allowance should be made using SDC_MP-SDA Form.
  6. Applications for exemption on import duty and sales tax should be made using SDC_ID&ST Form.
  7. To be eligible for the incentives, companies must commence operations by one year from the date of approval.

Documents Required

  • Completed SDC Tax Incentives Application Form
  • Form 9 – Companies Act 1965 (Certificate of Incorporation of Private Company)
  • Form 24 – Companies Act 1965 (Return of Allotment of Shares)
  • Form 44 – Companies Act 1965 (Notice of Situation of Registered Office)
  • Form 49 – Companies Act 1965 (Particulars of Directors, Managers and Secretaries)
  • Memorandum & Articles of Association
  • Most recent Board Minutes indicating venue of Board meeting
  • Certified True Copy of Land Lease Title*
  • Certified True Copy of Sales & Purchase/ Lease Agreement indicating parcel(s) of land(s) in approved Strategic Development Area (SDA) intended for development
  • Proof of payment (partial or full payment) for purchase consideration as stipulated in the Sale and Purchase Agreement
  • Development Conceptual Plan and Proposal
  • Masterplan for the development area as stipulated in the Land Lease Title and/ or Sales & Purchase agreement
  • Audited Financial Statements for 3 years
  • Form C – Income Tax Act  1967 (Income Tax Return Form to LHDN) for 3years

(* Either in applicant company’s name, or in the name of the current registered owner/ lessor, if the lease transaction has not been completed at the time of application).

All Applications should submitted to:

SEDIA, Level 26 – 28, Menara Tun Mustapha Yayasan Sabah Headquarters Complex Likas Bay P. O. Box 11623, 88817 Kota Kinabalu, Sabah.

For further clarification, please contact :
[email protected]

Download incentive application form

View Other Initiative

Marine Integrated Cluster (MIC) Semporna

Sandakan Education Hub, Sandakan

Sabah Agro-Industrial Precinct (SAIP) Kimanis, Papar

Integrated Livestock Valley (ILV) Keningau

Kinabalu Gold Coast Enclave (KGCE)