Please note that this article is not a definitive guide. Mystartr does not claim expertise in tax matters. Investors are encouraged to seek confirmations and clarifications from tax agents or the Lembaga Hasil Dalam Negeri.
To encourage more individual investors to participate in ECF, the government had announced in Budget 2021 that a qualifying individual who invests in ECF would be entitled to an income tax exemption, subject to conditions as stipulated in the Income Tax (Exemption) (No. 4) Order 2022 [P.U.(A) 142] (“Tax Exemption Order”). For more information, please refer here.
- A qualifying individual is granted an income tax exemption equivalent to 50% of the amount of their investment, up to a maximum of RM50,000 for each Year of Assessment (YA).
- This amount is limited to 10% of the aggregate income of the qualifying individual for the YA in the basis period during which the exemption is granted.
What is the eligibility for the ECF tax exemption?
- Individual investor must be an individual who is a Malaysian-resident makes an investment in ECF platforms recognized by SC.(ie.Mystartr)
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Only qualifying individual investors are eligible to apply for the ECF tax exemption. Corporate investors are not eligible for this exemption.
Definition of “qualifying individual” can be found under paragraph 2 of the Income Tax (Exemption) (No. 4) Order 2022 [P.U.(A) 142] (“Tax Exemption Order”). For more information, please refer here. - The investment made through ECF must be on or after 1 January 2021 but not later than 31 December 2023. The investment must not be disposed of, either in full or in part, within two years from the date the investment is made. “Date of investment" are refers to the closing date of the issuer’s fundraising campaign on the ECF platform
- ECF investment is held in a nominee companies incorporated under the Companies Act 2016 are eligible for this tax exemption. According to the Securities Commission Malaysia's recent update on tax exemption FAQs dated 12/12/23 (Question 8).
For more information, please refer here.
Is individual investor invest through “Limited Liability Partnership nominee company” qualify to apply for the ECF tax exemption?
Unfortunately, ECF investment is held in a Limited Liability Partnership nominee company which are governed by the Limited Liability Partnerships Act 2012 (Act 743), are not eligible currently for this tax exemption based on the existing guidelines (Budget 2021).
*As of 13 Oct 2023, the Ministry of Finance has proposed the tax incentive be expanded to investment made by individual investor through Limited Liability Partnership nominee company and be extended to 31 December 2026 as part of the Belanjawan Madani 2024.
However, it's important to note that this inclusion was not finalized as the budget was
not gazetted, and specific details regarding tax exemption were not announced.
We will provide an update here once further announcements have been made by the
relevant authorities.
Certification for Tax Exemption
Mystartr will issue a certificate/letter to confirm your eligibility for the tax exemption. Investors can use this certification when applying for the ECF tax exemption.