On 8 October 2019, the Malaysian Investment Development Authority (“MIDA”) announced enhancements to its headquarters hub tax incentive.
From a tax point of view, Principal Hub companies are classified on the basis of their level of value creation into a three-tier tax system where they pay tax rates of 0% to 10% over a 5-year period, which can be extended by another 5 years, depending on the number of qualified jobs created by them and their business expenditure.
To qualify for these incentives, a Principal Hub must operate and control network companies in at least three countries outside of Malaysia and carry out at least 3 specified qualification services, one of which must be strategic.
Thirty five multinationals have established principal hubs in Malaysia that qualify for the hub tax incentives since the program was introduced in 2015.
