On 29 December 2022, the Inland Revenue Board of Malaysia (IRBM) issued Public Ruling No. 12/2022 and Public Ruling No. 13/2022, on tax incentives for investments in R&D companies. The objective of this Public Ruling (PR) is to provide an explanation on the tax incentive available to a company that invests in its related company for the sole purpose of financing the commercialisation of public resource-based research and development (R&D) findings in Malaysia.

The commercialisation of public resource-based R&D findings involves the transformation of public R&D findings into new resource-based products or activities, or new process technology which has an industrial application or is marketable.

An investor company is a company (holding company) that invests in its related company (subsidiary company) for the sole purpose of financing a project on the commercialisation of public resource-based R&D findings. Such an investor company would be an eligible investor for the purpose of a tax incentive if it fulfills all of the following criteria –

(a) incorporated under the Companies Act 2016 [Act 777];

(b) resident in Malaysia;

(c) at least 70 per centum of the equity of the investor company must be Malaysian owned; and

(d) investment made must be in a related company whose equity is at least 70 per centum directly owned by the investor company, for the purpose of financing a project on the commercialisation of public resource-based R&D findings undertaken by the related company.

Resource-based R&D findings covers R&D in the following sectors – (a) agriculture; (b) agriculture and food processing; (c) oil palm products; (d) wood and wood-based products; (e) rubber-based products; (f) non-metallic mineral products; (g) natural products including pharmaceuticals; and (h) natural resources such as water, air, lightning and solar.