What is MSC Malaysia and How to Apply for MSC Status?

To accelerate the growth of the nation’s Digital Economy, the Malaysian government has established the MSC Malaysia status which provides eligible ICT-related businesses, both local and foreign, with a wide range of incentives, rights and privileges to promote continued growth.

MSC Malaysia status is recognized by the Government of Malaysia. These ICT and ICT-facilitated businesses can utilise the support of the Multimedia Development Corporation (MDeC) to develop or use multimedia technologies to produce and enhance their products and services.

With over 2,000 companies and counting, the MSC Malaysia status is a designation that is highly sought after by many IT establishments in the country. It is also a mark of world-class service and remarkable achievement to a host of privileges granted by the Government of Malaysia to the business entities.

Basic Eligibility Criteria

To be eligible to apply for the award of MSC Malaysia Status and the financial incentives, a company is required to meet the following criteria:

(a) a company incorporated under the Companies Act 2016 and resident in Malaysia;

(b) proposing to carry out one or more of the MSC Malaysia promoted activities as listed in Appendix 1 and has not issued any invoice for such proposed activities in Malaysia on the date of application (A company which has issued an invoice may be eligible if it has at least 60% Malaysian equity ownership and has issued its first invoice for such proposed activities in Malaysia not more than 12 months prior to the date of application.

(c) not granted by the Government of Malaysia tax exemption in respect of the income from any activity on the date of application.

If a company has a related company which has been granted tax exemption in respect of the income from an activity which falls under any of the items of the MSC Malaysia promoted activities, such company shall not be eligible to apply for the financial incentives under MSC Malaysia in respect of a proposed activity which falls under the same item.

• Provide or heavy user of IT & multimedia products & services
  
• Employ a substantial number of knowledge workers
  
• Strong value proposition specifying how operations will contribute to the development of MSC Malaysia
  
• Establish separate legal entity for MSC-qualifying activities
  
• Locate in a MSC Malaysia designated Cybercity or Cybercentre
  
• Comply with environmental guidelines

MSC Malaysia Promoted Activities

Companies that are planning to apply for MSC Malaysia status must be providing services which related to any of the following:

Qualified Promoted Activities

1. Big Data Analytics (BDA)
2. Artificial Intelligence (AI)
3. Financial Technology (FinTech)
4. Internet of Things (IoT)
5. Cybersecurity
6. (technology / software / design and support)
7. Data Centre and Cloud (technology / software / design and support)
8. Blockchain
9. Creative Media Technology
10. Sharing Economy Platform
11. User Interface and User Experience (UI / UX)
12. Integrated Circuit (IC) Design and Embedded Software
13. 3D Printing (technology / software / design and support)
14. Robotics (technology / software / design)
15. Autonomous (technology / software / design and support)
16. Systems / Network Architecture Design and Support
17. Global Business Services or Knowledge Process Outsourcing (excludes non-technical and / or low value call centre, data entry, and recruitment process outsourcing)

Non Qualifying Promoted Activities

1. Trading
2. Manufacturing
3. Provision of Telecommunication Services

What are the incentives available

Below are some of the incentives granted by the Federal Government of Malaysia to MSC Malaysia status companies:-

Financial Incentives

• Pioneer Status privilege, granted with a five (5) + five (5) year 100% exemption from taxable statutory income (on income derived from qualifying activities) starting from the date when the company starts generating income, renewable to 10 years.
• Receive a 100% Investment Tax Allowance (ITA) on new investments made in MSC Malaysia Cybercities/Cybercentres (commencing from the date on which the first qualifying capital expenditure is incurred).
• Eligible for R&D grants (for majority Malaysian owned MSC Malaysia status companies).

Duty-free Incentive

Duty-free importation of multimedia equipment, provided that the equipment is used by the company in the operation of its business, and not for direct sale and trading or use as components in manufactured items.

Freedom

• Freedom to source capital globally for MSC Malaysia infrastructure and the right to borrow funds globally.
• Freedom of ownership by exempting companies with MSC Malaysia status from local ownership requirements.
• Unrestricted employment of foreign knowledge workers.

Competitive Advantages

• Globally competitive telecommunication tariffs and services guarantees if MSC Malaysia status companies are located within the MSC Malaysia.
• Intellectual property protection and a pioneering and comprehensive framework of cyber laws can be enjoyed by MSC Malaysia status companies irrespective of location.

How to apply for MSC Malaysia Status?

As shown in the MDEC website, for those looking to apply for the MSC Malaysia status, here are the steps that you will need to go through:-

Step 1

1. Click ‘Apply MSC Status’ to register your account and complete the online application form within 30 working days.

Step 2

1. Your application will be reviewed for a preliminary check.
2. An acknowledgment receipt will be sent to your registered email upon successful preliminary check of your application.
3. A Business Analyst (BA) will be auto assigned to verify your application.
4. This step takes an estimated 7 working days.

Step 3

1. The assigned BA will evaluate your application.
2. A notification email will be sent to your registered email upon successful evaluation.
3. This step takes an estimated 20 working days.

Step 4

1. Your application will be presented to the Approval Committee.

Keen to obtain MSC status for your company? Come discuss your needs with us. Free consultation.

Reach out to us today at [email protected] or give us a call at +6016-619 4720 or +6011-5352 9492.

The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.