Johor is set to become a thriving economic hub with the newly established Johor-Singapore Special Economic Zone (JS-SEZ). This initiative, born out of a collaboration between Malaysia and Singapore, aims to attract businesses and investors by offering an attractive package of tax incentives and business-friendly policies.
With the Malaysian Government officially announcing the JS-SEZ tax incentive package on 8 January 2025, many businesses are keen to understand how they can benefit from these incentives. If you’re planning to invest in Johor, this is the perfect time to explore what JS-SEZ has to offer.
The application period for tax incentives runs from 1 January 2025 to 31 December 2034, and companies must submit their applications to the Malaysian Investment Development Authority (MIDA) via MIDA's online platform.
But what exactly are these incentives? Let’s break them down into key categories.
Manufacturing companies investing in JS-SEZ will enjoy significant tax advantages, particularly in sectors like AI and Quantum Computing, Medical Devices, Pharmaceuticals, and Aerospace Manufacturing.
Here’s what’s in store for investors:
New Companies
Companies investing more than RM1 billion: 5% tax rate for 15 years
Companies investing between RM500 million to RM1 billion: 5% tax rate for 10 years
Existing Companies
Companies investing above RM500 million in a new business segment (not an expansion) will receive an Investment Tax Allowance (ITA) of 100% on qualifying capital investment for 5 years, offset against 100% of statutory income.
Key Investment Zones:
Kulai-Sedenak (AI & Quantum Computing, Medical Devices, Pharmaceuticals)
Senai-Skudai (Aerospace Manufacturing & MRO Services)
Businesses engaged in strategic business planning, corporate development, regional P&L, and global treasury operations can benefit from a 5% special tax rate for up to 15 years.
Eligibility Criteria:
Annual operating expenditure of at least RM50 million
Business control over at least 10 network companies
Minimum annual sales turnover of RM500 million, with foreign exchange inflows into the Malaysian banking system
At least 50% of high-value positions (minimum RM10,000 salary) must be filled by Malaysians
Key Investment Zones:
Johor Bahru Waterfront (Flagship A)
Iskandar Puteri (Flagship B)
For those venturing into tourism, the JS-SEZ provides an Investment Tax Allowance (ITA) of 100% for qualifying capital expenditure incurred within five years, which can be offset against 70% of statutory income each year.
Additionally, companies making cash or in-kind contributions to hallmark events within JS-SEZ can enjoy a tax deduction of up to RM1 million per year.
Eligibility Criteria:
The company must not have an existing tourism-related entity in Malaysia
Minimum RM2.5 million paid-up capital
Minimum RM500 million investment (excluding land)
Development must include a hotel with at least 80 rooms and one major tourist attraction (e.g., water park, convention centre, outdoor sports facility)
Key Investment Zones:
Desaru-Penawar (Flagship G)
Businesses investing in smart logistics—such as regional distribution hubs, integrated logistics services, cold chain facilities, and dangerous goods storage—will benefit from Investment Tax Allowance (ITA) of 100% on qualifying capital investment within five years, offset against 100% of statutory income.
Eligibility Criteria:
Minimum RM500 million investment (excluding land)
Smart warehouse complex of at least 50,000 m²
Compliance with Industrial Building System (IBS) standards set by CIDB
80% of the workforce must be Malaysians
30% of high-value positions (earning RM10,000+) must be filled by Malaysians
Key Investment Zones:
Tanjung Pelepas (Flagship C)
Companies investing in specialty chemicals, polymers, fertilizers, and oleochemicals can benefit from a 5% or 10% tax rate for up to 10 years, depending on investment size.
Alternatively, they may opt for an ITA of 100% on qualifying capital investment within five years, offset against 100% of statutory income.
Eligibility Criteria:
Investment of at least RM500 million (excluding land)
Companies must be either new or diversifying into eligible activities
Minimum RM2.5 million paid-up capital
Key Investment Zones:
Tanjung Langsat-Kong Kong (Flagship D)
Qualifying businesses operating within JS-SEZ can claim Accelerated Capital Allowance (ACA) for renovation costs, covering:
Electrical, gas, and water systems
Kitchen and sanitary fittings
Flooring, partitions, and ceilings
Air-conditioning systems
Employee facilities (e.g., daycare centres, recreation rooms, surau)
Smart solutions and green elements
This incentive is applicable once throughout the business operation in JS-SEZ.
The Johor-Singapore Special Economic Zone (JS-SEZ) is an unprecedented opportunity for businesses looking to expand in Malaysia. With tax incentives spanning manufacturing, logistics, tourism, and global services, the region is set to become a premier investment hub.
Companies looking to capitalize on these incentives should act quickly and submit applications before the 31 December 2034 deadline.
For further assistance, visit MIDA’s website or contact Invest Malaysia Facilitation Centre Johor (IMFC-J) at IMFC-J’s website.
Stay tuned for more updates from KTP as we continue to guide businesses in navigating Malaysia’s tax landscape!
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