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Income Tax Exemption for Investments in VC and PE Funds to be Gazetted by Year-End.

The RM20 million income tax exemption was proposed in Budget 2018 for investments made in venture capital (VC) firms.


Income Tax Exemption for Investments in VC and PE Funds to be Gazetted by Year-End.

Minister of Energy, Science, Technology, Environment and Climate (MESTECC) Yeo Bee Yin urged investors to take advantage of income tax deductions - which is typically for money spent on management fees, performance fees and income from profit sharing received on investment made by venture capital companies.

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She said via the tax exemption, the government wants to incentivise private investment in VC, with the investment quantum deductible is up to RM20 million per year in their income tax filings with the Inland Revenue Board.

Minister of Energy, Science, Technology, Environment and Climate (MESTECC) Yeo Bee Yin
“With the private investments in VC, there will be greater market access, more expertise, better networking needed to grow and ensure the success rate of our start-ups increases,” said Yeo during the launch of Scaleup Malaysia recently.

She added the incentive would be claimable for investments made until 2023 with the incentive period starting at the first point of certification by the Securities Commission (SC) - under the previous government, this tax exemption was only claimable after the investor had withdrawn and exited their investments.

Currently, the five agencies under the purview of MESTECC are Malaysian Technology Development Corp, Malaysian Debt Ventures Bhd, Malaysia Venture Capital Management Bhd, Cradle Fund Sdn Bhd and Kumpulan Modal Perdana Sdn Bhd.

“Investors, whether they are high net worth individuals, venture capital (VC) or private equity (PE) funds can claim tax reduction after three years of investment,” she said.

The shortened period to claim tax deduction will only be gazetted at the end of the year, but investors can forward their applications to the Securities Commission.

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