Malaysia · Proposed legislation
Malaysia proposes revised green technology investment allowances
On 9 October 2026, Malaysia’s Government proposed revised green technology tax incentives in Budget 2027, with new project and own-use asset categories for the 2027–2030 application and investment window.
- Official document:
- Budget 2027, Tax Measures Appendix 25; Income Tax Act 1967 (Act 53), sections 127, 129A and 148
- Development date:
- 2026-10-09
Two project tiers
For green technology projects carried on as a business, the proposed top tier would cover green hydrogen and add ocean thermal energy conversion. It would grant an investment allowance equal to 100% of qualifying expenditure, deductible against either 100% or 70% of statutory income, for up to two five-year periods. Electric-vehicle charging stations and specified biomass, biogas, mini-hydro, geothermal and wind systems would move into a second tier with a 60% allowance, set against 70% of statutory income for five years.[1]
Own-use assets
The proposal separately revises the allowance for green assets used in a company’s own operations. Its 100% tier would include specified commercial electric vehicles, locally produced charging, waste-processing and water-recycling systems, and renewable-energy systems combined with battery or other energy storage. A 60% tier would cover specified infrastructure and renewable-energy assets without those top-tier features. Both tiers would be deductible against 70% of statutory income. Applications for business projects would run from 1 January 2027 to 31 December 2030; own-use assets would need to be purchased and verified in that period, with an MGTC application within 24 months of purchase.[1]
Current controls remain relevant
MGTC’s current own-use guidance requires the applicant to be Malaysian-incorporated and resident, and the asset to be new, company-owned and used for its Malaysian business rather than income generation. Related-group investments are subject to separation conditions. The company must obtain MGTC verification before claiming through its tax return, and unused allowances can be carried forward. These current controls provide context, but the final 2027–2030 conditions may differ.[2]
Proposal, not a present claim
The Income Tax Act 1967 provides the underlying exemption and approval architecture: section 127(3)(b) permits class exemptions by statutory order, section 127(3A) permits case-specific exemptions, and section 129A permits related treatment of capital allowances. Section 148 governs non-statutory approvals and directions. Budget 2027 remains a proposal: implementing approvals or instruments will determine the final conditions, so companies should not treat the announced measures as presently claimable.[1][3][4]
Official sources
- [1] Budget 2027 Tax Measures
Malaysian Ministry of Finance · Document date: 2026-10-09
Appendix 25, printed pages 34–36; current and proposed GITA project and own-use asset tiers, set-off percentages, incentive periods, application windows and MGTC deadline.
- [2] Green Technology Tax Incentive Guidelines — GITA Asset
Malaysian Green Technology and Climate Change Corporation · Document date: 2024-04-23
Complete nine-page guideline; sections 2.1, 3, 4 and 5 and Appendices 1–2: current tiers, eligibility, group separation, verification, claim and carry-forward mechanics.
- [3] Income Tax Act 1967 (Act 53), updated text as at 21 May 2024
Attorney General’s Chambers of Malaysia · Document date: 2024-05-21
Sections 127(3)(b) and 127(3A), printed page 393; section 129A, printed page 394; section 148, printed pages 429–430.
- [4] Speech — The Fifth MADANI Budget 2027
Malaysian Ministry of Finance · Document date: 2026-10-09
Header and opening: Prime Minister and Minister of Finance introduced Budget 2027 and the Supply Bill in the Dewan Rakyat on 9 October 2026.