TAX INCENTIVES FOR GREEN TECHNOLOGY: FOR A MORE SUSTAINABLE FUTURE

Green technology offers a way to strike a balance between the demands of economic growth and environmental sustainability. As everyone has started to address climate change in many forms of media, sustainable development and green technology must go hand in hand to drive the economy, create employment, and draw investment. Back in October 2013, The Green Technology Tax Incentive for the purchase and use of green technology was widely anticipated as it was introduced in Malaysia. This was without a doubt a major leap for Malaysia's solar industry. With the introduction of Investment Tax Allowance, the Malaysian government encourages the purchase of green technology equipment and assets such as LED lighting, solar panels, wind turbines, and electric vehicles (ITA). Furthermore, an Income Tax Exemption (ITE) has been put into practice in Malaysia, for green technology service providers such as solar companies. These are the three groups under the Green Technology Tax Incentive:

• Assets (GITA)
• Projects (GITA)
• Service Providers (under Green Investment Tax Exemption (GITE))

 The key advantages of these tax incentives are:

• To promote project-based renewable energy spending for business or personal use
• To encourage businesses to invest in green technology infrastructure
• To increase the amount of green technology service providers in Malaysia

What Are Green Investment Tax Allowance (GITA) Assets?

Companies that acquired qualifying renewable technology assets are eligible for the Green Investment Tax Allowance (GITA). To take advantage of this tax break, businesses must meet one of the following criteria:

• The companies in Malaysia should minimize the deterioration of the environment or reduce greenhouse emissions.
• They should focus on promoting health and improvement of the environment.
• They need to conserve the use of energy, water and other forms of natural resources, or promote the use of renewable energy, or recyclable waste material resources.

What is The Rate of Incentive?

• GITA of 100% of qualifying capital expenditure incurred on approved green technology assets from the date of purchase until 31 December 2020.
• The allowance can be offset against 70% of statutory income in the year of assessment.
• Unutilized allowances can be carried forward until they are fully absorbed.

What Is The Green Investment Tax Allowance (GITA) Project?

GITA Projects are for businesses that implement renewable technology that meets those criteria. Companies should comply with all of the following requirements:

• Minimize the degradation of the environment or reduce greenhouse emission
• Promote health and improvement of the environment
• Conserve the use of energy, water and/or other forms of natural resources, or promote the use of renewable energy, or recyclable waste material resources
• The application should be received by MIDA by December 2023.

What Are The Green Income Tax Exemption (GITE) Services?

Qualifying Activities To Be Approved For The Tax ExemptionsThere are two qualifying activities: 1. Renewable Energy - Energy from a source that is not depleted when used, such as:

• Solar Power
• Biomass
• Biogas
• Mini Hydro
• Geothermal

 2. Energy Efficiency - Companies that reduce the amount of energy required to provide products and services, and invest in energy-efficient equipment or technology. It's crucial to note that Malaysia's solar industry currently generates 67% of the country's 270 MWh of renewable energy. Every day, more companies in Malaysia have started to apply for solar panel systems to take advantage of the green technology, profitability in savings and protect the environment. Given the country's excellent conditions, solar power in Malaysia has all the elements for higher growth of development. According to SEDA, the renewable energy production goal for 2020 is 2,080 MW, or 11%, and 4,000 MW by 2030. The incentives would undoubtedly accelerate the deployment of green technologies around the world. Lastly, there are incredible advantages of using solar panels because:

• Solar power is pollution-free and causes no greenhouse gases to be emitted after installation.
• Reduced dependence on foreign oil and fossil fuels
• Clean power that is available every day of the year, especially in a tropical country such as Malaysia, where even cloudy days produces power.

 Visit our website for more information and latest news about solar energy.