Tax Deduction Rules on Listing Expenses on ACE and LEAP Markets for Technology-Based Companies
04 September 2020
- the eligible company must be involved in the design, development and manufacture, production or application in any of the fields and activities specified in the Schedule to the Rules1; and
- such activity has been certified by Bursa Malaysia Securities Berhad (the “Exchange”) as the principal business activity of the eligible company.
It is to be noted from the Schedule to the Rules that an eligible company must be involved in the activities listed in column (3) of the Schedule in the following fields set out in column (2) of the Schedule:
- advanced electronics and information technology;
- equipment/ instrumentation, automation and flexible manufacturing systems;
- life sciences and biotechnology;
- electro-optics, non-linear optics and optoelectronics;
- advanced materials;
- transportation; and
- value-added services (including specified education and training services).
The Rules allows an eligible company to claim a tax deduction for an amount equivalent to the amount of the following expenditures incurred by the eligible company in relation to its listing on the ACE Market or the LEAP Market of the Exchange, for the purpose of ascertaining its adjusted income for the basis period in a year of assessment:
- payment of fees to the Exchange and Securities Commission Malaysia;
- payment of the following professional fees:
- advisory fee to the sponsor, being the main adviser for a listing on the ACE Market and an approved adviser, being the main adviser for a listing on the LEAP Market;
- fees payable to a solicitor, company secretary, tax adviser, reporting accountant, auditor, valuer, independent market researcher, issuing house and share registrar in relation to the listing exercise; or
- payment of fees for underwriting, placement and brokerage services.
The deduction permitted under the Rules is subject to the following conditions:
- the eligible company must apply for listing on the ACE Market or the LEAP Market from year of assessment 2020 until year of assessment 2022;
- the deduction can only be claimed by the eligible company for the basis period in the year of assessment in which it is listed on the ACE Market or the LEAP Market;
- the total amount of the deduction shall not exceed RM1,500,000;
- the amount of deduction shall not exceed the adjusted income of the eligible company for the basis period in the year of assessment, which adjusted income shall be ascertained before such deduction; and
- where any part of the deductible expenditure cannot be claimed, or cannot be claimed in full, by reason of an absence or insufficiency of adjusted income in the relevant year of assessment, such expenditure cannot be claimed by the eligible company in any subsequent years of assessment.
The Rules give effect to an initiative announced in the Malaysia 2020 Budget and seek to assist technology-based companies to expand their businesses by raising additional capital through a listing on the ACE Market or the LEAP Market.
It is to be noted that for the purposes of the Rules, a “technology-based company” is not restricted to one that is involved in information and communications technology, but may be involved in in other fields of activity, such as healthcare, life sciences and biotechnology, advanced materials, transportation and education and training services, provided that it carries out the activities listed in the Schedule to the Rules.
Refer to the Schedule to the Rules for details of the qualifying fields and activities.