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Companies are shifting to Digital Status in Malaysia




Earlier in 1996, Malaysia introduced the Multimedia Super Corridor (MSC) project to promote and boost Malaysia's digital economy. This project provided a variety of incentives, including tax exemptions to businesses that qualified to achieve MSC status.


This year, the Malaysian government rebranded this program when the Malaysia Digital Economy Corporation (MDEC) introduced Malaysia Digital (MD) to take the place of MSC status as the new national strategic initiative.


MDEC will provide the MD status to companies that meet the requirements, take part in MD-related activities, and offer any relevant services.




What is Malaysia's Digital status?

Upon the launch, existing companies with MSC status are now replaced by only one status, MD. With this value-added initiative, Malaysia's digital economy will be promoted and made more appealing to businesses, talent, and investment.


The fact is that MD-status businesses are no longer restricted to a specific area or location and have the option to operate in almost any place that meets their needs.


The status also allows companies to take advantage of non-fiscal incentives provided by MDEC while also having the option to apply for any tax incentive programs provided by the government of Malaysia, subject to the relevant eligibility requirements and conditions of the said tax incentive.


Eligibility

● The applicant is a business with an Sdn Bhd firm incorporated in Malaysia.




Conditions of MD status

A company that has received MD status must observe the following requirements within a year of the date it was granted:

Activity: Start operations and carry out its MD-approved activities in Malaysia.

Knowledge workers: Employ at least two full-time individuals (including knowledge

workers) with a basic pay set at a minimum of RM5,000 each month for MD-certified

activities.

Operating Expenditure: The MD-approved activities shall have a minimum yearly

operational expense of RM50,000.

Paid-up Capital: A minimum of RM1,000.


MD status application process

When applying for MD status in Malaysia, here are the key phases.

  1. Within 30 days of the registration date, submit the online application form available on the MDEC website.

  2. Before a request is sent to an approval committee for discussion, examination, and decision-making, MDEC will assess each application.

  3. The decision of the approval committee will be communicated via a letter. The terms of the letter must be acknowledged and accepted by the successful candidates.

  4. Once the company has acknowledged and accepted the letter, an MD status Digital Certificate is issued.

  5. Unsuccessful applicants may reapply by submitting a new application to MDEC that meets the requirements.


Why does your company need the MD status?

Both domestic and foreign businesses can apply for MD status in Malaysia to qualify for a variety of benefits from the government. These advantages are provided under the MD Bill of Guarantees (BoGs) which will help them expand their operations.


These includes:

BoG 1. Foreign knowledge worker quota and passes;

BoG 2. Tax incentives (income tax exemption or investment tax allowance);

BoG 3. Multimedia/ICT equipment import duty and sales tax exemption;

BoG 4. Competitive and ready infrastructure for business available at MD Cybercities/Cyber centers;

BoG 5. Freedom of ownership by exempting from local ownership requirements;

BoG 6. Flexibility to source capital and funds globally


Other benefits are as below:

1. Access to the local and international market and ecosystem;

2. Business matching and partnership;

3. Grant and funding facilitation; and/or

4. Participation in MD catalytic (PEMANGKIN) programs.



Greater agility for the local and international digital sector

While looking into additional tax benefits provided by the federal, state, economic corridors, and special vehicle government agencies in Malaysia, new businesses pursuing the digital sector can use MD status as a platform to connect to the country's technological ecosystem.


It is necessary for businesses with current MD status to review their activities to determine whether the modifications have any effects on them and to reassess their business strategies to ensure that they adhere to the most recent requirements.



How does StanleyCo support you?

StanleyCo provides a comprehensive range of accounting, taxation and business consultancy services to a wide range of clients ranging from SME businesses to major international corporations.


● Help you evaluate incentives and plan your tax, financial, and other activities to improve and expand your company's potential.

● Recommend the ideal organization in Malaysia to fit your investment goals.

● Assist you with complete business advising services to achieve your business objectives.


Talk now to StanleyCo’s business specialists that can help you make informed decisions about your business and compliant processing.



Malaysia-Digital-MD-Status-Guidelines_Effective-30-June-2022
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