INGENIEUR
the number of high skilled jobs
they create and their business
expenditure.
A Tier 1 company that
proposes to hire 50 highly
skilled people and invests RM10
million in its business will pay
zero tax, while one that creates
15 such jobs and spends RM3
million will be taxed a maximum
10% under Tier 3. (see Guideline
2 by MIDA)
On top of the tax incentives,
approved Principal Hubs under
this scheme will also enjoy the
following additional operational
benefits:
●●
Goods-based companies
can bring in raw materials,
components or finished
products with customs duty
exemption into free industrial
zones, LMW, free commercial
zones
and
bonded
warehouses for production
or re -packaging, cargo
consolidation and integration
before distribution to end
consumers.
●●
The Government has relaxed
the guidelines on equity
ownership whereby Principal
Hubs will not be subject to
local equity and ownerships
conditions.
●●
Principal Hubs can hire
expatriates based on their
busines s requirement s.
Expatriate staff will only
be taxed on the portion
of chargeable inc ome
attributable to the number of
days they are in Malaysia.
●●
Principal Hubs will enjoy
flexibility in aspects such
as foreign exchange
administration in support
of business efficiency and
competitiveness of the
MNCs.
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VOL 62 APRIL – JUNE 2015
VOL 55 JUNE 2013
To qualify for the incentives,
a Principal Hub must serve and
control network companies in
at least three countries outside
Malaysia, and carry out at
least three specified qualifying
services, of which one must
be strategic services. (see
Guideline 3.5 by MIDA)
WHY GREATER KL IS A
COMPELLING PRINCIPAL
HUB
1. Ease of Doing Business with
a Business-Friendly Ecosystem
The growing presence of MNCs
in Greater KL is a testament
to the area’s thriving business
eco -system. This is made
up of the city’s affordable
and
business-friendly
environment, good transport
and telecommunication
infrastructure, young and
educated workforce, ample
supply of talent, investor
protection, and a good quality of
living.
The World Bank Group
Report 2015 puts Malaysia 1st
among emerging economies
in East Asia for Ease of Doing
Business, while among 183
economies worldwide, its rating
in “Doing Business 2015’’
improved to 18th from 20th.
The same report ranked
Malaysia 3 rd for “Get ting
Credit”, “Investor Protection’’,
and “Trading Across Borders”
respectively in East Asia and the
Asia-Pacific region.
Greater KL is also a great
place to do business due to its
excellent air, road, rail connectivity
and world-class ports. It is home
to Port Klang, which is the 12th
busiest port in the world while the
country’s international airport,
KLIA, is Asia’s 10th busiest and
fastest growing.
To reduce business costs,
PEMUDAH – the Special Task
Force to Facilitate Business –
has shortened the time taken to
process applications for permits
and licences by cutting down on
bureaucracy. As a result, 405
– or 52% – of all licences have
been eliminated or simplified,
giving rise to an estimated
savings of US$227.8 million in
licensing costs.
2. Competitive Cost and
Attractive Tax Regime
The Global Competitiveness
Index (GCI) 2014-2015 ranks
Malaysia 20 th among 144
countries, 7th in terms of efficient
and competitive markets for
goods and services, and 4th for
a well developed and sound
financial market.
Rated 11 th in the GCI
for quali t y of tr an sp or t
infrastructure, Malaysia is also
ranked 21st for innovation factor
and 15th for sophistication factor
in the country’s private sectors.
MNCs will find that office
rental rates in Greater KL are
among the lowest in Southeast
Asia.
In its 2014 publication,
“Greater KL: Striking the Right
Balance”, KPMG said Greater
KL’s monthly rental for prime
office space is about US$2.25
per sq ft, with rental cost per sq
ft in 2013 and 2014 being lower
than that in Singapore, Hong
Kong and Jakarta.
Malaysia also offers very
competitive tax incentives,
depending on type and scale
of activities, and has signed
72 Double Tax Agreements to
mitigate cross border taxation.