Malaysia has introduced enhanced accelerated capital allowance rules to support e-invoicing implementation, allowing businesses to recover qualifying ICT and software development costs more quickly for expenditures incurred from Year of Assessment 2024 to 2027. 

RF Report

Malaysia has gazetted the Income Tax (Accelerated Capital Allowance) (Information and Communication Technology Equipment for the Implementation of Electronic Invoice) Rules 2026 and the Income Tax (Accelerated Capital Allowance) (Development Cost for Customised Computer Software for the Implementation of Electronic Invoice) Rules 2026 on 7 April 2026.

The rules enhance accelerated capital allowance incentives to support the full implementation of e-invoicing. These rules apply to expenditures incurred from the year of assessment 2024 through 2027.

Accelerated capital allowance (ACA) rates

Under both sets of rules, eligible persons can claim a total allowance that effectively allows for the full recovery of capital expenditure over a very short period:

  • Initial allowance: One-fifth (20%) of the capital expenditure or development cost incurred.
  • Annual allowance: Two-fifths (40%) of the capital expenditure or development cost incurred.

Eligibility and compliance requirements

To qualify for these allowances, a person must be a resident of Malaysia and have incurred the expenditure for their business.

Additionally, the business must be registered with the Companies Commission of Malaysia (SSM), a business registration body, a local authority, or a statutory body. The claimant must comply with the implementation timeline set out in the Income Tax (Issuance of Electronic Invoice) Rules 2024 and adhere to all requirements specified in the guidelines issued by the Director General. The person must not have been granted any flexibility regarding e-invoice issuance under the Director General’s guidelines.

Scope of covered equipment and costs

The rules differentiate between physical hardware/standard software and customised development costs:

  1. ICT Equipment (P.U. (A) 162/2026): This includes the purchase and installation of items such as computers, central processing units (CPUs), storage devices, printers, scanners, bar code equipment, communication and network equipment, and software systems or packages.
  2. Customised Software Development (P.U. (A) 163/2026): This covers consultation fees, payments for software ownership rights, and incidental fees related to developing a customised computer software system for e-invoicing. These costs are deemed incurred when the software is capable of being used for the business.

Exclusions (Non-application)

These rules do not apply if the person has already claimed or been granted other tax incentives for the same expenditure, including:

  • Incentives under the Promotion of Investments Act 1986.
  • Reinvestment Allowance (Schedule 7A) or Investment Allowance for the service sector (Schedule 7B).
  • Deductions under Section 33 (general deductions) or Section 34A (research expenditure) of the Income Tax Act 1967.
  • Other Accelerated Capital Allowance rules.
  • Tax exemptions on statutory income equivalent to the capital expenditure incurred.