MoF Proposes Review Of Tax Incentives For Venture Capital

KUALA LUMPUR, Oct 10 (Bernama) -- The Ministry of Finance (MoF) has proposed to review tax incentives for venture capital companies (VCCs), venture capital management companies (VCMCs), and individual shareholders of VCCs to further encourage investment by VCCs.

For VCCs, the MoF, in an appendix issued in conjunction with the tabling of Budget 2026 today, said the proposed corporate tax rate is set at five per cent on all VCC income except for interest or profit income derived from savings, fixed deposits, or deposits. 

It said the VCC is required to invest a minimum of 20 per cent of its funds in local venture companies. 

The ministry said the tax incentive is given for 10 years or for the remaining life of the fund, starting from the year the VCC obtains its first certification from the Securities Commission Malaysia (SC). 

“The first certification by the SC must be obtained no later than Dec 31, 2035,” it said. 

The MoF said this tax incentive is expanded to entities incorporated under the Limited Liability Partnerships Act 2012 and the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010, which elect to be taxed under the Income Tax Act 1967. 

As for VCMC, the MoF said a tax rate of 10 per cent is imposed on income derived from the share of profits, management fees and performance fees from the year of assessment 2025 to 2035. 

Meanwhile, for individual shareholders of VCCs, an exemption of income tax is imposed on dividends paid, credited or distributed to individual shareholders at the first level from the year of assessment 2025 to 2035. 

-- BERNAMA