The Income Tax (Capital Allowance) (Development Cost for Customised Computer Software) Rules 2019 ("Rules") were gazetted on 3 October 2019. The Rules have effect from year of assessment 2018. This relief was announced under the 2018 Malaysian Budget.
 
The Rules allow a resident of Malaysia to claim capital allowance in respect of the development cost for customised computer software (i.e. consultation fee, payment for rights of software ownership and incidental fee relating to the development of customised computer software) incurred by that person in a basis period for a year of assessment commencing from 2018.
 
A qualifed person is entitled to claim an initial allowance equal to one-fifth and an annual allowance equal to one-fifth of the development costs incurred.
 
The Rules revoke the Income Tax (Deduction for Information Technology-Related Expenditure) Rules 2000 [P.U.(A) 51/2000].