Double Tax Deduction Initiative

This Double Tax Deduction Initiative is a tax exemption incentive granted to industries/companies that provide funds/cash contributions for research activities/projects or payments for using research services to UPM researchers. 

CRITERIA FOR DOUBLE TAX DEDUCTION

• The company must be conducting business and registered under the Companies Commission of Malaysia (SSM).
• The research services must be obtained from an approved research institute (IPYD) recognized by the relevant Minister.
• The funding for R&D activities must come from the company’s business revenue and not from public funds.
• The R&D project must be related to the company’s business.
• The R&D activities must meet the definition of R&D and eligibility criteria.
• Cash contributions must be made without imposing any conditions, or payments must be made for research services to an approved institution (IPYD).
• Companies, including those in the service sector, are eligible for the double tax deduction incentive on expenses incurred for R&D activities.

 

Definition of R&D:
R&D refers to systematic or intensive studies in the field of science or technology intending to utilize research outcomes to produce or improve materials, devices, products, outputs, or processes.
 

R&D Activities That DO NOT Qualify for Double Tax Deduction:

• Product quality control or routine testing of materials, devices, products, or outputs
• Research in social sciences and humanities
• Routine data collection
• Efficiency surveys or management studies
• Market research or sales promotion
• Regular or routine modifications of materials, tools, products, or production methods
• Cosmetic modifications or stylistic changes of materials, tools, products, or production methods

 

ELIGIBLE DTD EXPENSES:

• Raw materials
• Human resources (e.g., researcher and research assistant allowances, subject to applicable rates)
• Technical services (e.g., payments for testing services, data analysis)
• Travel costs
• Transportation costs
• Maintenance costs
• Rental expenses
• Others (e.g., utilities, printing reports, etc.)

 

NON-ELIGIBLE DTD EXPENSES:

• Capital expenditure (assets and inventory)
• Purchases from related subsidiaries
• Expenses not related to achieving the R&D project objectives
• Expenses related to market research
• Expenses related to intellectual property protection (patents, copyrights, etc.)
• Expenses related to commercialization activities

 

Updated:: 03/03/2025 [zaidi_tajuddin]