Budget 2017 - Extension of Pioneer status and ITA incentives for new 4 and 5 star hotels

At the Budget 2017 announcement on Fri 21 Oct 2016 the Prime Minister cum Finance Minister announced that the Pioneer Status (PS) and Investment Tax Allowance (ITA) incentives for the hotel sector (4 and 5-star hotels only) had been extended to 31 Dec 2018. Details as below.

Currently, hotel operators undertaking investments in new 4 and 5 star hotels are eligible for the following tax incentives:

i. Peninsular Malaysia:

a. Pioneer Status

Exemption of 70% of statutory income for a period of 5 years; or

b. Investment Tax Allowance

Allowance of 60% on the qualifying capital expenditure incurred within a period of 5 years. This allowance can be set-off against up to 70% of statutory income for each year of assessment. The above incentives are for applications received by the Malaysian Investment Development Authority (MIDA) from 8 October 2011 until 31 December 2016.

ii. Sabah and Sarawak:

a. Pioneer Status

Exemption of 100% of statutory income for a period of 5 years; or

b. Investment Tax Allowance

Allowance of 100% on the qualifying capital expenditure incurred within a period of 5 years. This allowance can be set-off against up to 100% of statutory income for each year of assessment. The above incentives are for applications received by MIDA from 30 August 2008 until 31 December 2016. To continue providing international standard accommodation facilities and to meet the requirements of high-end tourists, it is proposed that the application period for Pioneer Status or Investment Tax Allowance for investments in new 4 and 5 star hotels in Peninsular Malaysia, Sabah and Sarawak be extended for another 2 years.

Effective date : For applications received by MIDA from 1 January 2017 to 31 December 2018