Malaysia’s Incentive Hub Headquarters (Principal Hub Incentive 2.0) Is Better Than Ever
Malaysia’s government has announced the launch of the Principal Hub Incentive 2.0, a new and improved version of its predecessor.
Previously known as Principal Hub Incentive, the initiative was first introduced back in 2015. It allowed any company with existing operations in Malaysia to further leverage the country as a base to conduct their regional business.
The Hub’s Primary Functions
The hub will serve as an invaluable resource in terms of attracting companies into the country. It will encourage multinational corporations to tap into the benefits of setting up a base of operations in Malaysia. With its strategic location, multi-lingual talent and world-class infrastructure, it is the ideal location for many businesses to thrive.
The hub’s primary functions include the following:
- Risk management
- Strategic business activities
- Human resource management
New Tax Structure
Starting from 2019, companies can enjoy a 10% concessionary rate on taxes if they have operations in Malaysia. The new tax structure will replace the previous one where a company with operations in Malaysia only pays tax on incremental income. If a new company has yet to establish its presence in the country, they can enjoy a 0% tax rate. This rate is applicable for 10 years and will depend on their commitment level.
Principal Hub Incentive 2.0 as an Effort to Attract More Investments
The Principal Hub Incentive 2.0 upgrade is coming at the right time. Malaysia is continuing to innovate its strategies and policies in an effort to attract even more investments into the country. Malaysia aims to firmly integrate itself into the region and other markets, and this is one way to enhance its competitiveness.
Certain conditions have been relaxed with the upgraded Principal Hub Incentive 2.0. The main reason for this is to potentially attract more local companies and encourage them to explore expansion opportunities. The hub will eliminate the need for companies to serve a modicum number of countries located outside Malaysia. They will, however, still be required to serve the minimum number of network companies.
When the incentive was first introduced in 2015, 35 principal hub projects were approved by the Malaysian Investment Development Authority (MIDA). The total investments amounted to RM35.5 billion. Potentially 2,700 jobs of high-value were created thus. This improvement took place across several key industries, including oil and gas, aerospace, chemicals and information technology.
Submissions Deadline for Applications
Companies who are eligible for the benefits of the Principal Hub Incentive 2.0 are encouraged to reach out to MIDA and submit their applications. Ideally, this should be done as soon as possible. Only submissions received before 31 December 2020 will be considered.
For more information on the Principal Hub Incentive 2.0, visit MIDA’s website here.