Tax Incentive for ECF-i
This article is prepared with the aim of clarifying how the tax exemption for Equity Crowdfunding (ECF) in Malaysia works, and when individuals should file for the exemption.
Do note that this article is a non-definitive guide. AMB Connect makes no representations tax matters competency. Investors are advised to seek confirmations and clarifications from tax agents or Lembaga Hasil Dalam Negeri.
2021 Budget Tax Incentive
In Budget 2021, to encourage individuals to invest in ECF, it was proposed that individual investors be given an income tax exemption, subject to limits.
To legislate the above proposal, the Income Tax (Exemption) (No. 4) Order 2022 [P.U.(A) 142] was gazetted on 28 April 2022. The Order provides that:
- Qualifying individual is given an income tax exemption in respect of his aggregate income equivalent to 50% of the amount of investment, up to a maximum of RM50,000 for each Year Assessment (YA).
- The amount is limited to 10% of the aggregate income of the qualifying individual for the YA in the basis period for a year of assessment in which the exemption is granted.
How to be eligible for tax incentive and when to file?
Individual must be an individual who is a Malaysian-resident makes an investment in AMB Connect.
The qualifying individual does not have a parent (including parent-in-law), child (including stepchild or child adopted in accordance with any law), brother, sister, grandparent, grandchild or spouse who has invested in the investee company.
The Equity crowdfunding (ECF) investments must be made between 1 January 2021 and 31 December 2026*.
Investors must hold all the shared for 2 years.
At the end of 2 years, AMB Connect will issue a certificate to confirm your eligibility for tax exemption.
*As of January 2024, the Ministry of Finance has proposed that the above tax incentive be extended to 31 December 2026 as part of the Belanjawan Madani 2024.
You may find more details on Securities Commission FAQs on Tax Incentives HERE
Last Update: 22 July 2024
