PETALING JAYA: The definitions of “contract research and development company” and “research and development company” under Section 2 of the Promotion of Investments Act 1986 (PIA) has been amended to require companies to be approved as research and development (R&D) status companies by the Minister of International Trade and Industry (Miti) effective Jan 1.
The Malaysian Investment Development Authority (Mida) said companies in the business of providing R&D services namely contract R&D company and R&D company that wish to apply for R&D tax incentive will be granted R&D status (subject to Miti’s approval) for five years.
“Companies approved with this status may apply for an extension to Mida. However, the granting of the approval is subject to consideration by Miti and the Finance Ministry,“ Mida said in a statement today.
The Finance Bill 2021 provides that existing contract R&D companies and R&D companies which have been approved an R&D company before Jan 1 and categorise under the new definition of “contract research and development company” and “research and development company” are required to notify Mida from Jan 1 to June 30 for consideration.
“Companies are required to provide documents to prove that they are undertaking activities relating to R&D as defined under the PIA and complies with conditions imposed previously in their approval letters. Failure to do so will cause the companies to cease their status as approved companies fulfilling the definition of ‘contract research and development company’ and ‘research and development company’,“ Mida added.
Further to the Budget 2022 announcement, the Finance Bill 2021 was tabled in Parliament and unanimously passed on Dec 23, 2021. The Finance Bill 2021 incorporates several announcements made in the Budget 2022 and contains proposed amendments including to the PIA.
