G/SCM/Q2/MYS/21  
 
8 February 2016  
(16-0809)  Page: 1/2  
Committee on Subsidies and Countervailing Measures 
 Original: English  
 
SUBSIDIES 
REPLIES TO QUESTIONS1 POSED BY THE UNITED STATES REGARDING THE  
NEW AND FULL NOTIFICATION OF MALAYSIA2 
The following communication, dated 5 February 2016,  is being circulated at the request of the 
Delegation of Malaysia.  
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I. Programs Included in the Notification 
 
A.  Pioneer Status (Investment Promotion Act of 1986 ("PIA 1986"))  Publicly available information indicates that this program has multiple elements not reflected in the 
notification, such as multiple levels of tax exemption and various types of companies, products and 
activities eligible for support. Article 25.3 of the Subsidies Agreement requires that a subsidy "notification be sufficiently specific to enable ot her Members to evaluate the trade effects and to 
understand the operation of notified subsidy programmes." 
 Question 1 
 
Please describe all the tax exemption leve ls and types of companies, products and 
activities eligible for each re spective level of exemption. 
 
Reply: 
 
 The levels of tax exemption for Pioneer Status (PS) under the Promotion of Investment 
Act 1986 (PIA 1986) are as follows: 
i. income tax exemption of 70% of the statutor y income for a period of five years – for 
all eligible companies; 
ii. income tax exemption of 100% of the statutory income for a period of five years – 
for high technology companies; 
iii. income tax exemption of 100% of the statutory income for a period of five years – 
for Small Scale Manufacturing Companies; and 
iv. income tax exemption of 100% of the statutory income for a period of five to 
ten years – for strategic projects.  
 Pioneer Status may be granted to any company intending to participate in a promoted 
activity or to produce a promoted product including an activity/product which is of national 
and strategic importance to Malaysia. Promot ed activities and promoted products are 
determined by Minister of Finance and Minist er of International Trade and Industry. The 
promoted products and activities cover all sectors. 
                                               
1 G/SCM/Q2/MYS/20; G/SCM/Q2/MYS/20/Corr.1. 
2 G/SCM/N/253/MYS (28 November 2014). G/SCM/Q2/MYS/21 
 
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  Question 2 
 Are there legal measures other than or subsequent to IPA 1986 , such as implementing 
regulations that are directly pertinent to th e provision of incentives under this program 
and all of its elements? If so, please identi fy each measure and explain its relevance to 
each element of this program as applicable.  
Reply: 
 
None.  
B. Investment Tax Allowance (PIA 1986) 
 As with the Pioneer Status program, this program appears to have multiple facets not reflected in 
the notification, in terms of allowance levels and the eligible companies, products and activities. 
 Question 1 
 
Please describe in detail each of the allowa nce levels and types of companies, products 
and activities eligible for each respective level of allowance?  
 
Reply: 
 
 The tax exemption level for Investment Tax Allowance (ITA) under the Promotion of 
Investment Act 1986 (PIA 1986) is at 60%-100% on the qualifying capital expenditure 
incurred within five to ten years from the date the first qualifying capital expenditure is incurred. 
 Investment Tax Allowance (ITA) may be granted to any company intending to participate in 
a promoted activity or to produce a promoted product including an activity/product which is of national and strategic importance to Malays ia. Promoted activities and promoted products 
are determined and gazetted by the Minister of  International Trade and Industry. The list of 
promoted products and activities covers all sectors. 
 The allowance is only given on capital expenditure incurred on industrial buildings, plant and 
machinery directly used for the purpose of the promoted activities or the production of the 
promoted products. 
Question 2 
 
Are there legal measures other than or subsequent to IPA 1986 , such as implementing 
regulations that are directly pertinent to th e provision of incentives under this program 
and all of its elements? If so, please identi fy each measure and explain its relevance to 
each element of this program as applicable. 
 
Reply: 
 
None. 
 Question 3 
 
Other than as an offset against the compan y's taxable income, is the allowance under 
this program provided in the form of a gran t or some other form, and how is it conveyed 
to the company? 
 
Reply: 
 
None. 
 
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